Compania De Inversiones v. Grupo Cementos de Chihuahua
This text of Compania De Inversiones v. Grupo Cementos de Chihuahua (Compania De Inversiones v. Grupo Cementos de Chihuahua) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
Appellate Case: 21-1196 Document: 010110795395 Date Filed: 01/10/2023 Page: 1 FILED United States Court of Appeals PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS January 10, 2023
Christopher M. Wolpert FOR THE TENTH CIRCUIT Clerk of Court _________________________________
COMPAÑÍA DE INVERSIONES MERCANTILES S.A.,
Petitioner - Appellee,
v. No. 21-1196
GRUPO CEMENTOS DE CHIHUAHUA S.A.B. DE C.V.; GCC LATINOAMERICA, S.A. DE C.V.,
Respondents - Appellants.
–––––––––––––––––––––––––––––––––––
Petitioner - Appellee, No. 21-1324 v.
GRUPO CEMENTOS DE CHIHUAHUA S.A.B. DE C.V.; GCC LATINOAMERICA, S.A. DE C.V.,
Respondents - Appellants. _________________________________
Appeal from the United States District Court for the District of Colorado (D.C. No. 1:15-CV-02120-JLK) _________________________________
David M. Cooper, Quinn Emanuel Urquhart & Sullivan, LLP, New York, New York (Alex H. Loomis, Quinn Emanuel Urquhart & Sullivan, LLP, Boston, Massachusetts; Appellate Case: 21-1196 Document: 010110795395 Date Filed: 01/10/2023 Page: 2
Juan P. Morillo, Quinn Emanuel Urquhart & Sullivan, LLP, Washington, D. C.; David G. Palmer, Greenberg Traurig LLP, Denver, Colorado; and Daniel Pulecio-Boek, Greenberg Traurig, LLP, Washington, D. C., with him on the briefs) for Respondents – Appellants.
Eliot Lauer (Gabriel Hertzberg, Juan O. Perla, Sylvi Sareva with him on the briefs) Curtis, Mallet-Prevost, Colt & Mosle LLP, New York, New York for Petitioner – Appellee. _________________________________
Before HOLMES, Chief Judge, MATHESON, and ROSSMAN, Circuit Judges. _________________________________
MATHESON, Circuit Judge. _________________________________
A Bolivian arbitration tribunal awarded $36 million in damages to Compañía
de Inversiones Mercantiles S.A. (“CIMSA”) against Grupo Cementos de Chihuahua
S.A.B. de C.V. (“GCC”). GCC fought the award in the Bolivian courts, losing before
a chamber of Bolivia’s highest constitutional court in 2016.1 In 2019, CIMSA
obtained an order from the U.S. District Court for the District of Colorado
confirming the award. In 2020, GCC convinced a different chamber of Bolivia’s
highest constitutional court to invalidate its prior decision, and a Bolivian trial judge
subsequently annulled the award. GCC then moved the U.S. district court to vacate
the confirmation order. The district court (1) denied GCC’s motion and (2) ordered
GCC to turn over assets located in Mexico to satisfy the award. GCC brought
1 As we discuss below, Bolivia’s highest constitutional court is comprised of groups of judges, known as “chambers.” 21-1196, App., Vol. IV at 879 n.2; 21-1196, App., Vol. V at 1056-57, 1201 n.1.
2 Appellate Case: 21-1196 Document: 010110795395 Date Filed: 01/10/2023 Page: 3
separate appeals from these two rulings. Exercising jurisdiction under 28 U.S.C.
§ 1291, we affirm in both appeals.
I. BACKGROUND
A. Shareholder Agreement to Arbitration – 2005-20152
The Parties’ Shareholder Agreement – 2005
In 2005, GCC, a set of related Mexican companies, sought to acquire an
interest in Bolivia’s largest cement company, Sociedad Boliviana de Cemento, S.A.
(“SOBOCE”). Compañía I, 970 F.3d at 1276-77. At that time, CIMSA, a Bolivian
company, was SOBOCE’s controlling shareholder. GCC offered CIMSA
approximately $59 million to purchase a 47 percent interest in SOBOCE.
Id. at 1276-77. CIMSA accepted, and on September 22, 2005, the parties entered
into a shareholder agreement as SOBOCE’s two principal shareholders (the
“Shareholder Agreement”). Id. at 1277.
The Shareholder Agreement allowed each party to sell its shares in SOBOCE
to a third party after a period of five years, so long as the selling party gave notice to
the other party and provided it an opportunity to purchase the shares on the same or
better terms within 30 days. Id.
2 Our opinion in Compañía de Inversiones Mercantiles, S.A. v. Grupo Cementos de Chihuahua S.A.B. de C.V., 970 F.3d 1269 (10th Cir. 2020), cert. denied, 141 S. Ct. 2793 (2021) (“Compañía I”), set forth the facts underlying these cases. We draw facts from that opinion unless otherwise indicated.
3 Appellate Case: 21-1196 Document: 010110795395 Date Filed: 01/10/2023 Page: 4
Under the Shareholder Agreement, (1) the parties would submit any disputes
regarding a breach to international arbitration for final resolution and (2) the rules
and regulations of the Inter-American Commercial Arbitration Commission
(“IACAC”) would govern. See 21-1196, Suppl. App. at 2. The “national chapter of
the [IACAC] in Bolivia” would conduct the arbitration, three arbitrators would
preside, and Bolivian law would apply. Id.; Compañía I, 970 F.3d at 1278, 1291.
The parties agreed that “[a]ny awards or orders issued by the Arbitration Court shall
be final and of mandatory compliance” and “expressly waive[d] all actions for
annulment, objection, or appeal against the award.” 21-1196, Suppl. App. at 2.
The Parties’ Commercial Dispute – 2009-2011
In 2009, GCC informed CIMSA that it intended to sell its SOBOCE shares
after the five-year holding period. Compañía I, 970 F.3d at 1277. Between 2009 and
2011, the parties attempted to reach a deal for CIMSA to purchase those shares, but
they failed to reach an agreement. Id.
In July 2011, GCC notified CIMSA that a Peruvian company had tendered a
firm offer to buy GCC’s SOBOCE shares. Id. CIMSA reiterated its desire to
purchase the shares. This time GCC said it would accept CIMSA’s proposed
payment terms. Id. In August 2011, GCC sent CIMSA a draft purchase
agreement. Id.
But “[r]ight before the transaction was set to close, GCC demanded an
increase in the number of SOBOCE shares CIMSA would place in trust, from 4% to
27%, allegedly to ensure CIMSA’s compliance with a longer payment schedule.” Id.
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In response, “CIMSA attempted to exercise its right of first refusal under the
terms . . . that had been negotiated by the parties.” Id. GCC said CIMSA’s attempt
to exercise that right was invalid and sold its SOBOCE shares to the Peruvian
company. Id.
Arbitration – 2011-2015
In November 2011, CIMSA invoked the Shareholder Agreement’s arbitration
clause and initiated arbitration proceedings, claiming that GCC violated the
Shareholder Agreement by failing to honor the right of first refusal. Id. at 1278.
A three-member tribunal (the “Arbitral Tribunal”) presided over the arbitration in
Bolivia. Id. The parties agreed to bifurcate the proceedings into a merits phase and a
damages phase. Id.
In September 2013, the Arbitral Tribunal issued a merits ruling, holding that
GCC breached the right of first refusal in the Shareholder Agreement (the “Merits
Award”). Id. In April 2015, the Arbitral Tribunal awarded CIMSA approximately
$34 million in damages and $2 million in fees and costs, with interest accruing at
6 percent annually on those amounts (the “Damages Award”). Id. at 1280.
B. Court Proceedings – 2015-2021
Post-arbitration court proceedings primarily occurred in Bolivia and the United
States, often simultaneously.3 GCC attempted to annul the Merits and Damages
3 Court proceedings also occurred in Mexico, but those are primarily relevant to Case No. 21-1324, so we defer our discussion of those proceedings until we turn to that appeal.
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Appellate Case: 21-1196 Document: 010110795395 Date Filed: 01/10/2023 Page: 1 FILED United States Court of Appeals PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS January 10, 2023
Christopher M. Wolpert FOR THE TENTH CIRCUIT Clerk of Court _________________________________
COMPAÑÍA DE INVERSIONES MERCANTILES S.A.,
Petitioner - Appellee,
v. No. 21-1196
GRUPO CEMENTOS DE CHIHUAHUA S.A.B. DE C.V.; GCC LATINOAMERICA, S.A. DE C.V.,
Respondents - Appellants.
–––––––––––––––––––––––––––––––––––
Petitioner - Appellee, No. 21-1324 v.
GRUPO CEMENTOS DE CHIHUAHUA S.A.B. DE C.V.; GCC LATINOAMERICA, S.A. DE C.V.,
Respondents - Appellants. _________________________________
Appeal from the United States District Court for the District of Colorado (D.C. No. 1:15-CV-02120-JLK) _________________________________
David M. Cooper, Quinn Emanuel Urquhart & Sullivan, LLP, New York, New York (Alex H. Loomis, Quinn Emanuel Urquhart & Sullivan, LLP, Boston, Massachusetts; Appellate Case: 21-1196 Document: 010110795395 Date Filed: 01/10/2023 Page: 2
Juan P. Morillo, Quinn Emanuel Urquhart & Sullivan, LLP, Washington, D. C.; David G. Palmer, Greenberg Traurig LLP, Denver, Colorado; and Daniel Pulecio-Boek, Greenberg Traurig, LLP, Washington, D. C., with him on the briefs) for Respondents – Appellants.
Eliot Lauer (Gabriel Hertzberg, Juan O. Perla, Sylvi Sareva with him on the briefs) Curtis, Mallet-Prevost, Colt & Mosle LLP, New York, New York for Petitioner – Appellee. _________________________________
Before HOLMES, Chief Judge, MATHESON, and ROSSMAN, Circuit Judges. _________________________________
MATHESON, Circuit Judge. _________________________________
A Bolivian arbitration tribunal awarded $36 million in damages to Compañía
de Inversiones Mercantiles S.A. (“CIMSA”) against Grupo Cementos de Chihuahua
S.A.B. de C.V. (“GCC”). GCC fought the award in the Bolivian courts, losing before
a chamber of Bolivia’s highest constitutional court in 2016.1 In 2019, CIMSA
obtained an order from the U.S. District Court for the District of Colorado
confirming the award. In 2020, GCC convinced a different chamber of Bolivia’s
highest constitutional court to invalidate its prior decision, and a Bolivian trial judge
subsequently annulled the award. GCC then moved the U.S. district court to vacate
the confirmation order. The district court (1) denied GCC’s motion and (2) ordered
GCC to turn over assets located in Mexico to satisfy the award. GCC brought
1 As we discuss below, Bolivia’s highest constitutional court is comprised of groups of judges, known as “chambers.” 21-1196, App., Vol. IV at 879 n.2; 21-1196, App., Vol. V at 1056-57, 1201 n.1.
2 Appellate Case: 21-1196 Document: 010110795395 Date Filed: 01/10/2023 Page: 3
separate appeals from these two rulings. Exercising jurisdiction under 28 U.S.C.
§ 1291, we affirm in both appeals.
I. BACKGROUND
A. Shareholder Agreement to Arbitration – 2005-20152
The Parties’ Shareholder Agreement – 2005
In 2005, GCC, a set of related Mexican companies, sought to acquire an
interest in Bolivia’s largest cement company, Sociedad Boliviana de Cemento, S.A.
(“SOBOCE”). Compañía I, 970 F.3d at 1276-77. At that time, CIMSA, a Bolivian
company, was SOBOCE’s controlling shareholder. GCC offered CIMSA
approximately $59 million to purchase a 47 percent interest in SOBOCE.
Id. at 1276-77. CIMSA accepted, and on September 22, 2005, the parties entered
into a shareholder agreement as SOBOCE’s two principal shareholders (the
“Shareholder Agreement”). Id. at 1277.
The Shareholder Agreement allowed each party to sell its shares in SOBOCE
to a third party after a period of five years, so long as the selling party gave notice to
the other party and provided it an opportunity to purchase the shares on the same or
better terms within 30 days. Id.
2 Our opinion in Compañía de Inversiones Mercantiles, S.A. v. Grupo Cementos de Chihuahua S.A.B. de C.V., 970 F.3d 1269 (10th Cir. 2020), cert. denied, 141 S. Ct. 2793 (2021) (“Compañía I”), set forth the facts underlying these cases. We draw facts from that opinion unless otherwise indicated.
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Under the Shareholder Agreement, (1) the parties would submit any disputes
regarding a breach to international arbitration for final resolution and (2) the rules
and regulations of the Inter-American Commercial Arbitration Commission
(“IACAC”) would govern. See 21-1196, Suppl. App. at 2. The “national chapter of
the [IACAC] in Bolivia” would conduct the arbitration, three arbitrators would
preside, and Bolivian law would apply. Id.; Compañía I, 970 F.3d at 1278, 1291.
The parties agreed that “[a]ny awards or orders issued by the Arbitration Court shall
be final and of mandatory compliance” and “expressly waive[d] all actions for
annulment, objection, or appeal against the award.” 21-1196, Suppl. App. at 2.
The Parties’ Commercial Dispute – 2009-2011
In 2009, GCC informed CIMSA that it intended to sell its SOBOCE shares
after the five-year holding period. Compañía I, 970 F.3d at 1277. Between 2009 and
2011, the parties attempted to reach a deal for CIMSA to purchase those shares, but
they failed to reach an agreement. Id.
In July 2011, GCC notified CIMSA that a Peruvian company had tendered a
firm offer to buy GCC’s SOBOCE shares. Id. CIMSA reiterated its desire to
purchase the shares. This time GCC said it would accept CIMSA’s proposed
payment terms. Id. In August 2011, GCC sent CIMSA a draft purchase
agreement. Id.
But “[r]ight before the transaction was set to close, GCC demanded an
increase in the number of SOBOCE shares CIMSA would place in trust, from 4% to
27%, allegedly to ensure CIMSA’s compliance with a longer payment schedule.” Id.
4 Appellate Case: 21-1196 Document: 010110795395 Date Filed: 01/10/2023 Page: 5
In response, “CIMSA attempted to exercise its right of first refusal under the
terms . . . that had been negotiated by the parties.” Id. GCC said CIMSA’s attempt
to exercise that right was invalid and sold its SOBOCE shares to the Peruvian
company. Id.
Arbitration – 2011-2015
In November 2011, CIMSA invoked the Shareholder Agreement’s arbitration
clause and initiated arbitration proceedings, claiming that GCC violated the
Shareholder Agreement by failing to honor the right of first refusal. Id. at 1278.
A three-member tribunal (the “Arbitral Tribunal”) presided over the arbitration in
Bolivia. Id. The parties agreed to bifurcate the proceedings into a merits phase and a
damages phase. Id.
In September 2013, the Arbitral Tribunal issued a merits ruling, holding that
GCC breached the right of first refusal in the Shareholder Agreement (the “Merits
Award”). Id. In April 2015, the Arbitral Tribunal awarded CIMSA approximately
$34 million in damages and $2 million in fees and costs, with interest accruing at
6 percent annually on those amounts (the “Damages Award”). Id. at 1280.
B. Court Proceedings – 2015-2021
Post-arbitration court proceedings primarily occurred in Bolivia and the United
States, often simultaneously.3 GCC attempted to annul the Merits and Damages
3 Court proceedings also occurred in Mexico, but those are primarily relevant to Case No. 21-1324, so we defer our discussion of those proceedings until we turn to that appeal.
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Awards in Bolivia and block their enforcement in Mexico, while CIMSA sought to
confirm the arbitral award in the United States. To facilitate an understanding of the
background facts and proceedings underlying these appeals, we first provide
background on Bolivian courts and legal procedures. We then summarize the
proceedings in Bolivia and the United States.
Bolivian Courts and Procedures
a. Bolivian courts
The Bolivian judiciary has multiple court levels, including trial courts and a
Supreme Court. Mauricio Ipiña Nagel, Update: The Bolivian Legal System, N.Y.U.
Hauser Glob. L. Program, GlobaLex, https://perma.cc/6FVQ-SQKA. Bolivian judges
for the Civil and Commercial Court are trial judges, and each judge is assigned a
distinguishing number—e.g., the “Twelfth Judge.” See Compañía I, 970 F.3d
at 1275; 21-1196, App., Vol. II at 369.
When a party asserts a constitutional violation, a court is randomly assigned to
review it and is referred to as a “Guarantee Court.” Compañía I, 970 F.3d at 1278;
21-1196, App., Vol. II at 370; 21-1196, App., Vol. IV at 804 n.4. The Plurinational
Constitutional Tribunal (the “PCT”)—independent from the other Bolivian courts—
reviews Guarantee Court decisions. Nagel, supra. The PCT is the highest
constitutional court. Id.; Compañía I, 970 F.3d at 1278. It ultimately decides
constitutional matters and is comprised of four distinct groups of judges, known as
chambers. See 21-1196, App., Vol. IV at 879 n.2; 21-1196, App., Vol. V at 1201 n.1.
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b. Bolivian procedures
In Bolivia, a litigant may initiate an amparo, “an extraordinary remedy that
must be based on an alleged violation of rights protected by the Bolivian Constitution.”
Compañía I, 970 F.3d at 1278; see 21-1196, App., Vol. II at 370.4 A Bolivian court
is then randomly assigned to review the amparo as a Guarantee Court. 21-1196,
App., Vol. II at 370; 21-1196, App., Vol. IV at 804. After a Guarantee Court decides
an amparo, that decision is sent to the PCT for review. See Allan R. Brewer-Carías,
Constitutional Protection of Human Rights in Latin America 108-09, 404 (2009).
Under Bolivian law, a Guarantee Court’s decisions regarding amparos “shall
be complied with immediately.” 21-1196, App., Vol. IV at 779; see also 21-1196,
App., Vol. II at 374. A party can seek immediate compliance with an amparo
decision by filing a queja por incumplimiento (“queja”) with the Guarantee Court
4 With the adoption of the [Bolivian] Constitution in 2009, individuals can petition an action of amparo (acción amparo constitucional) to vindicate their constitutional rights. The amparo action is one which grants protection against the illegal or wrongful acts or omissions of public officials, as well as individual or collective persons, that restrict, suppress or threaten with restricting or suppressing a person’s fundamental rights and guarantees recognized by the Constitution. In other words, this action can be filed against public and private actors that arbitrarily impair the constitutional rights of others. In essence, the amparo action allows a person the ability to activate constitutional justice in defense of her fundamental rights or constitutional guarantees, in the face of ultra vires actions. Jorge Farinacci-Fernós, When Social History Becomes A Constitution: The Bolivian Post-Liberal Experiment And The Central Role Of History And Intent In Constitutional Adjudication, 47 Sw. L. Rev. 137, 174 (2017) (quotations omitted).
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that issued that decision. See 21-1196, Vol. IV at 779. A queja “is a special
mechanism used to compel compliance by officials with existing amparo decisions.”
Id. at 813-14. Bolivian law allows “Guarantee Courts and the PCT to adopt
necessary measures to ensure compliance with amparo decisions.” Id. at 779.
Bolivian Court Proceedings: GCC’s Challenges to the Merits and Damages Awards – 2015-2017
GCC sought to annul the Merits and Damages Awards in two separate
proceedings. This appeal mainly concerns GCC’s challenge to the Damages Award.
We briefly describe the Merits Award proceedings before detailing the Damages
Award proceedings.
a. Merits Award proceedings
After the Arbitral Tribunal decided for CIMSA on the merits, GCC filed a
request in a Bolivian court to annul that award. Compañía I, 970 F.3d at 1278. That
request was assigned to the Eighth Judge for the Civil and Commercial Court of the
Judicial District of La Paz (the “Eighth Judge”), a trial judge. Id. In August 2015,
the Eighth Judge denied GCC’s annulment request. Id. Under Bolivian law, GCC
could not directly appeal a denial of annulment, but it could initiate an amparo. Id.
GCC did so, asserting that the Eighth Judge violated its due process rights and the
right to a defense. Id. at 1297; 21-1196, App., Vol. II at 370, 412. “GCC’s amparo
was assigned to . . . a Guarantee Court, which in October 2015 granted GCC’s
requested relief, annulled the Eighth Judge[’s] [d]ecision, and remanded the matter to
the Eighth Judge for a new decision.” Compañía I, 970 F.3d at 1278 (quotations
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omitted). In March 2016, the PCT reversed the Guarantee Court, “concluding that
the Eighth Judge had not violated GCC’s constitutional rights.” Id. at 1279; see id.
at 1297. We determined that the March 2016 PCT Order “effectively reinstated the
[M]erits [A]ward as a final and binding judgment.” Id. at 1298.
b. Damages Award proceedings
On July 3, 2015, GCC sought leave from the Arbitral Tribunal to file a request
in a Bolivian court to annul the Damages Award. Id. at 1280. The Arbitral Tribunal
granted GCC leave, and on September 24, 2015, GCC filed a request to annul the
Damages Award. See 21-1196, App., Vol. II at 383. The matter was assigned to the
Twelfth Civil and Commercial Court of the Judicial District of La Paz (the “Twelfth
Judge”).5
i. Annulment and subsequent proceedings
On October 9, 2015, the Twelfth Judge annulled the Damages Award.
21-1196, App., Vol. III at 512-13; App., Vol. II at 383. CIMSA then filed two
amparos challenging that decision.
First, on October 28, 2015, CIMSA filed an amparo against the Arbitral
Tribunal (the “First Amparo”). 21-1196, App., Vol. III at 537-38. It asked the court
to set aside (1) the Arbitral Tribunal’s order granting GCC leave to seek judicial
5 As we describe in more detail below, on September 25, 2015, CIMSA petitioned to confirm the Damages Award in the United States District Court for the District of Colorado. See Compañía I, 970 F.3d at 1280; 21-1196, App., Vol. I at 138.
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annulment of the Damages Award and (2) the Twelfth Judge’s annulment decision.
Id. at 537-38.
In January 2016, a Guarantee Court denied the First Amparo. 21-1196,
App., Vol. II at 384. The court explained that it could not reach the merits of the
First Amparo because the Twelfth Judge annulled the Damages Award and the
Twelfth Judge was not included as a party to the First Amparo. 21-1196, App.,
Vol. IV at 717-18. The Guarantee Court thus could not invalidate the Arbitral
Tribunal’s grant of leave without affecting the annulment decision, which was
outside the scope of the First Amparo. Id. at 804. By law, the Guarantee Court’s
amparo decision was sent to the PCT for review. Compañía I, 970 F.3d at 1278.
Second, on April 8, 2016, CIMSA filed an amparo against the Twelfth Judge,
seeking to set aside the annulment decision (the “Second Amparo”). 21-1196,
App., Vol. II at 384; 21-1196, App., Vol. III at 538; 21-1196, App., Vol. IV at 772.
On October 21, 2016, a different Guarantee Court denied CIMSA’s Second Amparo
because CIMSA could not file it while the First Amparo was pending before the PCT.
21-1196, App., Vol. II at 384; App., Vol. IV at 806. That decision was also sent by
law to the PCT for review. Compañía I, 970 F.3d at 1278.
ii. PCT review of the Amparos
1) November 2016 PCT decision
In November 2016, the PCT affirmed the Guarantee Court’s decision rejecting
CIMSA’s First Amparo. 21-1196, App., Vol. II at 384; 21-1196, App., Vol. IV
at 805. It explained that because annulling the Arbitral Tribunal’s order granting
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leave to GCC would lead to annulment of the Twelfth Judge’s decision, the PCT
could not reach CIMSA’s request because the Twelfth Judge was not included as a
party. 21-1196, App., Vol. IV at 718.
2) December 2016 PCT decision
In December 2016, a different chamber of the PCT decided the Second
Amparo (the “December 2016 PCT Judgment”). 21-1196, App., Vol. III at 516.
The PCT vacated the Twelfth Judge’s annulment order and directed the Twelfth
Judge to issue a new order consistent with the PCT’s decision. Id. at 547.
First, the PCT determined that it could consider the Second Amparo even
though CIMSA filed it while the First Amparo was pending. Id. at 538-39.
It explained that the two amparos were separate because they involved different
defendants and underlying facts and sought different relief. Id. at 538-39.
Specifically, the First Amparo challenged the Arbitral Tribunal’s “procedural order,”
which addressed a “purely . . . procedural, rather than a substantive, matter.”
Id. at 537-38. The Second Amparo named the Twelfth Judge as a party and
challenged her annulment decision. Id. at 538.
Second, on the merits of the Second Amparo, the PCT held that the Twelfth
Judge’s annulment order “was arbitrary and unreasonable, and consequently violated
[CIMSA’s] right to due process.” Id. at 546. The annulment order violated
CIMSA’s due process rights because the Twelfth Judge “got into questioning,
considering and revisiting the examination of the evidence . . . and arriv[ed] at a
different interpretation than that arrived at by the arbitrators.” Id. at 540.
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Immediately after the December 2016 PCT Judgment, GCC sought
clarification from the PCT, arguing the December ruling had invalidated the PCT’s
November 2016 decision. 21-1196, App., Vol. IV at 808-09. In a January 2017
order, the PCT said “there was no potential for contradiction” between the two PCT
decisions because the first was procedural and did not address the merits, whereas the
December 2016 PCT Judgment did address the merits. Id. at 809. The PCT
reiterated that each amparo “involved distinct parties, subject matters, and causes of
action.” Id.
iii. Remand before the Twelfth Judge
In April 2017, CIMSA petitioned the Twelfth Judge to issue a new decision
consistent with the December 2016 PCT Judgment. Id. The next day, the Twelfth
Judge issued an order stating that she would do so. Id. But GCC immediately
initiated a collateral action before the PCT “challenging the constitutionality of
Bolivia’s arbitration law and its restriction on the right to appeal an arbitral award,”
which stayed the proceedings before the Twelfth Judge. 21-1196, App., Vol. V
at 1203-04. The PCT rejected GCC’s challenge, finding it “manifestly meritless,”
and again directed the Twelfth Judge to issue a new decision on GCC’s request for
annulment of the Damages Award. Id. at 1204.
Following that PCT order, GCC argued to the Twelfth Judge that she lacked
jurisdiction to enter a new decision because a different Bolivian trial judge’s
nullification of the Merits Award effectively nullified the Damages Award. Id. The
Twelfth Judge then requested clarification from the IACAC as to the status of the
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Merits Award, but the IACAC did not respond. Id.; 21-1196, App., Vol. IV at 811.
GCC then asked the Twelfth Judge to certify that the Damages Award proceedings
were still pending and that the Damages Award was thus not binding. 21-1196, App.,
Vol. IV at 812. In response, the Twelfth Judge certified that the Damages Award
proceedings were pending but declined to certify whether the Damages Award was
binding. Id. No further action was taken.
United States Court Proceedings: Confirmation of the Damages Award – 2015-2020
In September 2015, CIMSA petitioned the United States District Court for the
District of Colorado to confirm the arbitration award. CIMSA relied on the New
York Convention on the Recognition and Enforcement of Foreign Arbitral Awards
(the “New York Convention”), June 10, 1958, 21 U.S.T. 2517. Compañía I, 970 F.3d
at 1276, 1280. The New York Convention—implemented through the Federal
Arbitration Act—“is a multilateral treaty that addresses international arbitration.”
GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC,
140 S. Ct. 1637, 1644 (2020). Under the Convention, a party may apply for
“recognition and enforcement” of an arbitral award. 21 U.S.T. 2517, art. IV.
Although CIMSA had filed its petition to confirm the arbitral award in 2015, it was
unable to serve GCC until 2018 when the district court authorized alternative service
because GCC “supposedly could not be located at the headquarters address shown on
[its] website.” Compañía I, 970 F.3d at 1280.
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In June 2018, CIMSA filed a renewed motion to confirm the Damages Award.
Dist. Ct. Doc. 50. “GCC responded to the confirmation motion and filed a
‘cross-motion’ to dismiss the petition,” arguing it was not subject to personal
jurisdiction. Compañía I, 970 F.3d at 1280. GCC also asserted that the district court
could not confirm the Damages Award because (1) Bolivian courts had nullified the
Merits Award and (2) annulment proceedings regarding the Damages Award were
ongoing in Bolivia. The Twelfth Judge had not issued a decision following the
December 2016 PCT Judgment. See id.
The district court found that it had personal jurisdiction over GCC. In March
2019, it confirmed the Damages Award, concluding it was binding under the New
York Convention (the “Confirmation Judgment”). Id. GCC appealed, arguing the
district court erred in exercising personal jurisdiction and in confirming the award.
See id. at 1276.
In August 2020, in Compañía I, we affirmed the district court’s rulings on
personal jurisdiction and confirmation of the Damages Award. Id. We said that
“[t]he district court properly determined that CIMSA’s injury arose out of or related to
GCC’s nationwide contacts” and that “exercising personal jurisdiction over GCC
comported with fair play and substantial justice because CIMSA established minimum
contacts and GCC did not make a compelling case to the contrary.” Id. We further said
that service of process on GCC’s United States counsel was proper. Id. In affirming the
district court’s confirmation of the arbitral award, we agreed with the district court that
Bolivian courts had not set aside the Merits Award and that the district court’s
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confirmation of the award was appropriate under the New York Convention even if
GCC’s challenge to the Damages Award remained pending in Bolivia. Id.
Bolivian Court Proceedings: GCC’s Post-Confirmation Challenge to the Damages Award – 2019-2020
In May 2019—approximately two months after the U.S. district court
confirmed the arbitral award—GCC initiated a new challenge to CIMSA’s amparos.
It asked the Guarantee Court that decided the First Amparo to enforce its decision
dismissing that amparo and also to dismiss the Second Amparo. 21-1196, App.,
Vol. IV at 813. The Guarantee Court denied GCC’s request, explaining that the
December 2016 PCT Judgment was binding and that GCC must seek any relief
regarding the Second Amparo from the same Guarantee Court that addressed it. Id.
GCC challenged that decision in that Guarantee Court through a queja, which “is a
special mechanism used to compel compliance by officials with existing amparo
decisions.” Id. at 813-14. In its queja, GCC argued that the Second Amparo was
invalid because CIMSA impermissibly filed it in “breach” of the First Amparo. Id.
at 814; 21-1196, App., Vol. V at 1207. The Guarantee Court denied the queja
because, as the December 2016 PCT Judgment concluded, there was no identity
between parties, subject matters, and causes of action between the two amparos.
21-1196, App., Vol. IV at 814-15.
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GCC appealed the Guarantee Court’s decision to the PCT.6 Id. at 815.
A different chamber of the PCT, which had not been involved in any of the prior PCT
decisions, reviewed the queja. Compare id. at 704, with id. at 771, and 21-1196,
App., Vol. III at 516. On October 29, 2020, the PCT notified the parties that it had
granted GCC relief and invalidated the December 2016 PCT Judgment (the “2020
PCT Order”). 21-1196, App., Vol. IV at 718-19, 722.7 It determined that, although
the two amparos involved different defendants, “the object and purpose of both
actions turned out to be the same” because both related to the arbitration and GCC’s
request for annulment. 21-1196, App., Vol. III at 720. The PCT concluded that “the
[Second Amparo] was [the] product of deceit induced by [CIMSA], failing to observe
the implicit mandate of the [First Amparo], since it generated duplicity of actions,
that could have led to judicial chaos.” Id. at 721. The Second Amparo thus “was not
brought to juridical life” and “no authority [was] bound to observe a determination
arising from” it. Id. The PCT ordered “strict observance of the effect caused by the
[First Amparo] proceeding” such that all actions after the Guarantee Court’s January
2016 order—which rejected the First Amparo on procedural grounds—“are annulled
and not subject to validation.” Id. at 722.
6 Unlike an amparo, which is immediately sent to the PCT for review, a party must appeal a queja decision to the PCT. See 21-1196, App., Vol. IV at 815. 7 Although the order is dated February 18, 2020, it appears that the PCT backdated the order. Compare App., Vol. IV at 704 (order dated February 18, 2020), with id. at 722-25 (indicating the order was signed on October 29, 2020); see Compañía I, 970 F.3d at 1279 (noting another PCT order was backdated six months).
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In light of the PCT’s ruling, the Twelfth Judge issued an ex parte order on
November 5, 2020, reinstating her decision to annul the Damages Award and
returning the matter to the Arbitral Tribunal to issue a new damages award.
Id. at 729, 819. Days later, CIMSA sought reconsideration of that decision or the
right to appeal, but the Twelfth Judge denied both requests. Id. at 819, 821. CIMSA
challenged the Twelfth Judge’s dismissal of its request to appeal, which was denied.
Id. at 821-23.
United States Court Proceedings – 2020-2021
With the 2020 Bolivian orders in hand, GCC returned to the U.S. district court
and moved under Federal Rule of Civil Procedure 60(b)(5) to vacate the district
court’s judgment confirming the arbitral award. Id. at 658. Under Rule 60(b)(5),
“[o]n motion and just terms, the court may relieve a party . . . from a final judgment”
if that judgment “is based on an earlier judgment that has been reversed or vacated.”
The district court denied that motion. It “conclude[d] that application of the
[Bolivian] orders would offend basic standards of justice,” which outweighed
according comity to those orders. 21-1196, App., Vol. V at 1198, 1212, 1218. It also
determined that GCC’s conduct in Bolivian and U.S. courts “swayed [Rule 60(b)’s]
equitable considerations decidedly against it.” Id. at 1219. GCC timely appealed.
In September 2021, the district court ordered GCC to turn over certain assets
located in Mexico to the court’s registry to satisfy the judgment against it (the
“Turnover Order”). 21-1324, App., Vol. VII at 1808-809. GCC timely appealed.
* * * *
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We turn next to each appeal, providing additional background information as
needed. We first address GCC’s appeal of the district court’s order denying relief
under Rule 60(b)(5), Case No. 21-1196. We then consider GCC’s appeal of the
district court’s order requiring GCC to turn over certain assets, Case No. 21-1324.
II. CASE NO. 21-1196 – DENIAL OF RELIEF UNDER RULE 60(b)(5)
GCC argues that the district court erred by refusing to vacate the Confirmation
Judgment. It contends that the 2020 Bolivian court orders annulling the Damages
Award8 required vacatur. Because the district court did not abuse its discretion by
refusing to vacate its Confirmation Judgment, we affirm.
A. Standard of Review
We review a district court’s denial of a Rule 60(b)(5) motion for abuse of
discretion, “keeping in mind that Rule 60(b) relief is extraordinary and may only be
granted in exceptional circumstances.” Dronsejko v. Thornton, 632 F.3d 658, 664
(10th Cir. 2011) (quotations omitted); see 11 Charles Alan Wright & Arthur R.
Miller, Federal Practice and Procedure § 2863 (3d Ed. 1998) (“Wright & Miller”)
(“The [Rule 60(b)(5)] motion is addressed to the sound discretion of the court.”). “In
the Rule 60(b) context, we review the district court’s ruling only to determine if a
definite, clear or unmistakable error occurred below.” Jackson v. Los Lunas Cmty.
8 These are the 2020 PCT Order granting GCC’s queja and the Twelfth Judge’s reinstatement of the order annulling the Damages Award. Although only the Twelfth Judge’s order annulled the Damages Award, the 2020 PCT Order provided the basis for that decision.
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Program, 880 F.3d 1176, 1191 (10th Cir. 2018) (quotations omitted). We may
reverse only if there is “a complete absence of a reasonable basis” and we are
“certain that the decision is wrong.” Id. (quotations omitted). A district court abuses
its discretion only when it (1) “fails to consider the applicable legal standard,”
(2) relies on clearly erroneous factual findings, or (3) lacks a reasonable basis in the
evidence to support its ruling. Id. (quotations omitted).
B. Legal Background
This appeal concerns whether the district court abused its discretion when it
denied a motion to vacate its judgment confirming a foreign arbitral award under the
New York Convention and Rule 60(b)(5). We thus provide background on the
Convention, Rule 60(b)(5), and related case law.
New York Convention
As noted above, the New York Convention is a multilateral treaty on
international arbitration. Its principal purpose “was to encourage the recognition and
enforcement of commercial arbitration agreements in international contracts and to
unify the standards by which agreements to arbitrate are observed and arbitral awards
are enforced in the signatory countries.” Scherk v. Alberto-Culver Co., 417 U.S. 506,
520 n.15 (1974). The Supreme Court explained that, following the United States’
adoption of the New York Convention, the “emphatic federal policy in favor of
arbitral dispute resolution . . . applies with special force in the field of international
commerce.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.
614, 631 (1985).
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The New York Convention contemplates that an arbitral award may be issued
in one country but confirmed in another country. 21 U.S.T. 2517, arts. I, V. Courts
have referred to these countries as primary and secondary jurisdictions. See, e.g.,
Thai-Lao Lignite (Thailand) Co. v. Gov’t of Lao People’s Democratic Republic,
864 F.3d 172, 176 (2d Cir. 2017); TermoRio S.A. E.S.P. v. Electranta S.P.,
487 F.3d 928, 935 (D.C. Cir. 2007). A “primary jurisdiction” is the country where
the arbitral award was issued. See Thai-Lao, 864 F.3d at 176. A “secondary
jurisdiction” is the country where confirmation of that award is sought. See id.;
see also Esso Expl. & Prod. Nigeria Ltd. v. Nigerian Nat’l Petroleum Corp., 40 F.4th
56, 62 (2d Cir. 2022). The Convention states that “[e]ach Contracting State shall
recognize arbitral awards as binding.” 21 U.S.T. 2517, art. III. A secondary
jurisdiction thus must generally confirm an arbitral award subject to certain defenses.
Compañía I, 970 F.3d at 1286, 1295.
The Convention lists seven defenses. A secondary jurisdiction “may . . .
refuse[]” to recognize and enforce an award if the party opposing confirmation
establishes that any one of them applies. 21 U.S.T. 2517, art. V; Compañía I,
970 F.3d at 1287, 1295-96. “Courts construe [these] defenses narrowly, to encourage
recognition and enforcement of commercial arbitration agreements in international
contracts.” Compañía I, 970 F.3d at 1296 (quotations omitted). “[A]nd the party
opposing confirmation of the award bears the burden of furnishing proof of an
enumerated defense.” Goldgroup Res., Inc. v. DynaResource de Mexico, S.A. de
C.V., 994 F.3d 1181, 1191 (10th Cir. 2021).
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One of the defenses provides that “[r]ecognition and enforcement of the
[arbitral] award may be refused” if “[t]he award . . . has been set aside or suspended
by a competent authority” in the primary jurisdiction. 21 U.S.T. 2517, art. V(1)(e).
Another defense provides that “[r]ecognition and enforcement of an arbitral award
may also be refused if the competent authority in the country where recognition and
enforcement is sought finds that . . . [t]he recognition or enforcement of the award
would be contrary to the public policy of that country.” Id., art. V(2)(b). When a
primary jurisdiction has annulled an arbitral award, a secondary jurisdiction must
balance comity to the foreign annulment order against its country’s public policy.
See Corporación Mexicana de Mantenimiento Integral, S. de R.L. de C.V. v.
Pemex-Exploración y Producción, 832 F.3d 92, 106 (2d Cir. 2016). “[C]omity is the
recognition which one nation allows within its territory to the legislative, executive
or judicial acts of another nation, having due regard both to international duty and
convenience, and to the rights of its own citizens, or of other persons who are under
the protection of its laws.” MacArthur v. San Juan Cnty., 497 F.3d 1057, 1066–67
(10th Cir. 2007) (quotations omitted).
Federal Rule of Civil Procedure 60(b)(5)
The Convention instructs a secondary jurisdiction to enforce arbitral awards in
accordance with its rules of procedure. 21 U.S.T. 2517, art. III. In the United States,
the Federal Rules of Civil Procedure apply. See Thai-Lao, 864 F.3d at 185. The
Federal Rules also apply to motions seeking vacatur of judgments confirming arbitral
awards. See id.
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Under Federal Rule of Civil Procedure 60(b)(5), a “court may relieve a
party . . . from a final judgment” if that judgment “is based on an earlier judgment
that has been reversed or vacated.” But a court is not required to set aside a
judgment “simply because it was based on a prior judgment that has later been
reversed.” Manzanares v. City of Albuquerque, 628 F.3d 1237, 1241
(10th Cir. 2010). Rather, relief under Rule 60(b)(5) “is an extraordinary remedy”
limited to “exceptional circumstances.” Jackson, 880 F.3d at 1191-92. Thus, the
party seeking vacatur has the burden of establishing it is entitled to relief. Dronsejko,
632 F.3d at 672; Thai-Lao, 864 F.3d at 187.
“Rule 60(b) gives the court a grand reservoir of equitable power to do justice
in a particular case.” Manzanares, 628 F.3d at 1241 (quotations omitted). And
“because every Rule 60(b) motion by definition seeks ‘equitable relief’ from the
court,” In re Gledhill, 76 F.3d 1070, 1078 (10th Cir. 1996), a court may “consider
whether the moving party has acted equitably,” 12 Moore’s Federal Practice, § 60.22
(Matthew Bender 3d Ed.); see Amoco Oil Co. v. U.S. E.P.A., 231 F.3d 694, 698-99
(10th Cir. 2000) (evaluating movant’s actions to determine whether it was entitled to
“equitable remedy” of vacatur under Rule 60(b)).
In Thai-Lao, the Second Circuit explained that “in ruling on a Rule
60(b)(5) motion, even in the context of a judgment entered on a foreign arbitral
award under the New York Convention, a district court should be guided by the full
range of interests protected by Rule 60(b).” 864 F.3d at 186. It “should consider
whether the motion was made within a reasonable time, whether the movant acted
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equitably, and whether vacatur would strike an appropriate balance between serving
the ends of justice and preserving the finality of judgments.” Id.
Relevant Circuit Cases
Only six circuit decisions, four from the Second Circuit and two from the D.C.
Circuit, have addressed whether a U.S. court may confirm an arbitral award that a
primary jurisdiction has annulled. Only Thai-Lao concerned a district court’s ruling
on a Rule 60(b)(5) motion to vacate a judgment confirming an arbitral award that
later had been annulled in the foreign primary jurisdiction.9 Although “[n]one of
these [six] out-of-circuit cases binds this Court,” Tucker v. Faith Bible Chapel
International, 36 F.4th 1021, 1044 (10th Cir. 2022), we find them instructive and
provide a brief overview.
a. Baker Marine
In Baker Marine (Nig.) Ltd. v. Chevron (Nig.) Ltd., 191 F.3d 194 (2d Cir.
1999), the Second Circuit first suggested that U.S. public policy can overcome
comity to a foreign annulment order. Id. at 196, 197 n.3. After arbitration in
Nigeria, (1) the parties separately moved in Nigeria to confirm and annul the arbitral
awards, (2) the Nigerian court annulled the awards, and (3) the party that had
prevailed in arbitration then moved to confirm the arbitral awards in the United
States. Id. at 196. The district court refused to confirm the awards and instead
9 In Thai-Lao, the district court granted vacatur. Here, the district court denied vacatur. In both instances, the standard of review on appeal is abuse of discretion.
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accorded comity to the Nigerian annulment. Id. The Second Circuit affirmed. Id.
at 198. It explained that the appellant “ha[d] shown no adequate reason for refusing”
to recognize the annulment order. Id. at 197. It noted that “[r]ecognition of the
Nigerian [annulment order]” did not “conflict with United States public policy.”
Id. at 197 n.3.
b. Pemex
In Pemex, the Second Circuit affirmed the district court’s confirmation of an
arbitral award despite a Mexican court’s annulment of that award. 832 F.3d at 97.
After arbitration in Mexico, a U.S. district court confirmed the arbitral award.
Id. at 99. The nonprevailing party in arbitration then appealed the confirmation
judgment to the Second Circuit and simultaneously filed an action in Mexico to annul
the award. Id. A Mexican court annulled the award while the appeal was pending, so
the Second Circuit remanded for the district court to consider the effect of the
annulment. Id. The district court declined to accord comity to the annulment and
again confirmed the award. Id. at 100.
On appeal from the district court’s refusal to accord comity and its second
confirmation of the arbitral award, the Second Circuit explained that under the
Panama Convention,10 although a secondary jurisdiction may confirm an arbitral
10 The Panama Convention is another multilateral international treaty governing the enforcement of arbitral awards. Goldgroup, 994 F.3d at 1188 n.4. Courts interpret the New York and Panama Conventions interchangeably because “‘[t]here is no substantive difference’ between the two conventions and the defenses under each are the same.” Id. (quoting Pemex, 832 F.3d at 105).
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award that a primary jurisdiction has set aside, it must weigh comity to the foreign
annulment order. Id. at 106. Thus, an annulment “is generally conclusive unless
enforcement of the [annulment] would offend the public policy of the state in which
enforcement is sought.” Id. (quotations and alterations omitted). The Pemex court
explained that an annulment is unenforceable on public policy grounds if it “tends
clearly to undermine the public interest, the public confidence in the administration
of the law, or security for individual rights of personal liberty or of private property.”
Id. (quotations omitted).
The Second Circuit concluded that the district court did not abuse its discretion
by confirming the arbitral award despite the Mexican annulment because public
policy concerns overcame comity. Id. at 107. It determined that “giving effect” to
the foreign annulment would be “repugnant to fundamental notions of what is decent
and just” under U.S. public policy. Id. at 97, 108-11.
c. Thai-Lao
In Thai-Lao, the Second Circuit held that the district court did not abuse its
discretion by vacating its confirmation of an arbitral award based on the primary
jurisdiction’s later annulment of that award. 864 F.3d at 181.
After arbitration in Malaysia, (1) the losing party moved to annul the award in
Malaysia, (2) the U.S. district court confirmed the award, and (3) a Malaysian court
then annulled the award. Id. at 175, 179-180. The district court then vacated its
confirmation judgment. Id. at 175, 180. It accorded comity to the Malaysian
annulment because giving effect to the annulment order would not violate U.S.
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“notions of what is decent and just.” Id. at 180-81 (quotations omitted). On appeal,
the appellant—the prevailing party in the arbitration—argued that the district court
erred because it did not consider the “full range of interests protected by Rule 60(b)”
and should have given more weight to the nonprevailing party’s inequitable conduct.
Id. at 182. The Second Circuit, emphasizing that it reviewed for abuse of discretion,
see id. at 181,182, 187, 189, held the district court “did not exceed the permissible
bounds of its discretion” by granting relief, id. at 187.
In explaining its decision, the court said that under the New York Convention,
comity interests generally constrain a court from disregarding a primary jurisdiction’s
annulment of an arbitral award. Id. at 183, 186. But it also said a primary
jurisdiction’s annulment is not “dispositive,” id. at 186, and a court may refuse to
accord comity to an annulment “to vindicate fundamental notions of what is decent
and just in the United States,” id. at 176 (quotations omitted). A foreign annulment
is therefore unenforceable if that annulment or “giving effect to [it]” would violate
U.S. public policy. Id. at 183-84, 186.
The court also explained that under Rule 60(b)(5), a district court should
consider the timeliness of the motion, whether the movant acted equitably, and the
importance of finality of judgments. Id. at 182, 186. It concluded that the district
court did not abuse its discretion by vacating its confirmation judgment because
vacatur did not violate U.S. public policy and Rule 60(b)(5) considerations did not
bar vacatur. Id. at 189.
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d. Esso
In Esso, the Second Circuit held the district court did not abuse its discretion by
extending comity to foreign orders partially annulling an arbitral award. 40 F.4th
at 61, 77. After arbitration in Nigeria, (1) a Nigerian trial court annulled the arbitral
award, (2) the prevailing party in arbitration petitioned to confirm the award in the U.S.,
and (3) the Nigerian Court of Appeal affirmed partial annulment of the arbitral award.
Id. at 64-66. The Second Circuit noted that appeals from the partial annulment orders
were pending before the Supreme Court of Nigeria. Id. at 65.
Quoting Pemex, Esso said that based on “the prudential concern of international
comity,” id. at 73, a foreign annulment order “is generally conclusive unless enforcement
of the [order] would offend the public policy of the state in which enforcement is
sought,” id. at 63 (quoting Pemex, 832 F.3d at 106). It explained that in weighing comity
to a foreign annulment order, courts should “consider . . . factors relevant to the
circumstances of a particular case.” Id. at 71-72. The Second Circuit affirmed “the
district court’s discretionary decision to afford comity” to the foreign annulment orders,
id. at 74, because they were not “repugnant to fundamental notions of what is decent and
just in [the United States],” id. at 77.11
11 Esso noted the secondary jurisdiction’s role is not to second-guess the primary jurisdiction’s “substantive determinations made under [its own] law” but to assess foreign annulment orders “only so far as is required to ascertain whether they are plainly incompatible with U.S. notions of justice.” 40 F.4th at 74.
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e. TermoRio
In TermoRio, the D.C. Circuit affirmed the dismissal of an action to confirm a
foreign arbitral award. 487 F.3d at 930. After arbitration in Colombia, (1) the losing
party moved in Colombia to annul the arbitral award, (2) Colombia’s highest
administrative court annulled the award, and (3) the parties that had prevailed in
arbitration then filed an action in the United States to confirm the arbitral award.
Id. at 929. The district court dismissed the confirmation action because a Colombian
court had annulled the award. Id. at 929-30.
The D.C. Circuit concluded that the appellants failed to show that the foreign
annulment should be disregarded on public policy grounds. Id. at 939. It explained
that “there is a narrow public policy gloss on Article V(1)(e) of the Convention and
that a foreign [annulment] is unenforceable as against public policy to the extent that
it is repugnant to fundamental notions of what is decent and just in the United
States.” Id. (quotations omitted). The court determined that the appellants had
“neither alleged nor provided any evidence to suggest that the parties’ proceedings
before Colombia’s [highest administrative court] or the [annulment order] of that
court violated any basic notions of justice to which we subscribe.” Id.
f. Getma
In Getma International v. Republic of Guinea, 862 F.3d 45 (D.C. Cir. 2017),
the D.C. Circuit also affirmed a district court’s refusal to confirm a foreign arbitral
award that a primary jurisdiction had annulled. Id. at 47. After arbitration, (1) the
losing party moved in the primary jurisdiction to annul the award, (2) the prevailing
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party filed a U.S. lawsuit to confirm the arbitral award, and (3) the primary
jurisdiction then annulled the award. See In re Arb. of Certain Controversies
Between Getma Int’l & Republic of Guinea, 191 F. Supp. 3d 43, 48 (D.D.C. 2016).
The district court refused to confirm the arbitral award because the primary
jurisdiction had annulled it. Getma, 862 F.3d at 48.
The D.C. Circuit said that, “for reasons of international comity, [it has]
declined to ‘second-guess’ a competent authority’s annulment of an arbitral award
absent ‘extraordinary circumstances.’” Id. (quoting TermoRio, 487 F.3d at 936-39).
It explained that it would “enforce an annulled award only if the annulment is
‘repugnant to fundamental notions of what is decent and just’ in the United States.”
Id. (quoting TermoRio, 487 F.3d at 938).
Applicable Law
The foregoing describes the law that is relevant to our review of the district
court’s vacatur decision under the abuse of discretion standard. We describe here
how it applies to the following scenarios.
When the prevailing party in arbitration seeks confirmation of a foreign
arbitral award in a U.S. district court, the New York Convention calls for recognition
and enforcement of the award absent any defenses to doing so. 21 U.S.T. 2517,
art. V(1). This was the situation when CIMSA requested the district court to confirm
the Bolivian arbitral award. The district court entered the Confirmation Judgment,
and this court affirmed. Compañía I, 970 F.3d at 1276.
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When the prevailing party seeks confirmation and the nonprevailing party
presents the defense that the foreign jurisdiction has set the arbitral award aside, the
district court must perform a weighing analysis, generally according comity to the
foreign annulment order unless doing so violates United States public policy.
See Pemex, 832 F.3d at 106; see also Esso, 40 F.4th at 73-74; Getma, 862 F.3d
at 48-49; TermoRio, 487 F.3d at 938. This was the situation in Pemex, in which the
Second Circuit said that, due to comity, a foreign annulment is “generally conclusive
unless enforcement of the [annulment] would offend the public policy of the state in
which enforcement is sought.” 832 F.3d at 106 (quotations and alterations omitted).
But the Pemex court also said a district court may confirm the arbitral award if
“giving effect to the subsequent nullification of the award . . . would run counter to
United States public policy.” Id. at 97; see also Esso, 40 F.4th at 63. And in Pemex,
the Second Circuit affirmed the district court’s confirmation of the arbitral award in
the face of a foreign order annulling the award. 832 F.3d at 97.
When the nonprevailing party moves the district court under Rule 60(b)(5) to
vacate the court’s previous confirmation judgment on the ground that the movant
obtained an annulment order from the foreign jurisdiction, additional considerations
come into play. This was the situation in Thai-Lao, where the nonprevailing party
sought to obtain annulment of the arbitral award in the foreign jurisdiction before the
district court had ruled on the prevailing party’s request for confirmation of the
award, but the annulment order issued after the confirmation order. 864 F.3d
at 179-80. The Second Circuit said, as in Pemex, that the district court must balance
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comity against United States’ public policy. Id. at 176. But when seeking relief
under Rule 60(b)(5), the moving party must provide “highly convincing” evidence
that it is entitled to this extraordinary remedy and that its conduct as a matter of
equity should allow vacatur. Id. at 182; see also Jackson, 880 F.3d at 1191-92. In
Thai-Lao, the Second Circuit affirmed the district court’s grant of vacatur under
Rule 60(b)(5), holding the district court did not abuse its discretion. 864 F.3d
at 189.12
Like Thai-Lao, our case involves a Rule 60(b)(5) motion to vacate a
confirmation order because the foreign jurisdiction has annulled the arbitral award.
But the cases differ in two significant respects. First, unlike in Thai-Lao, the district
12 The New York Convention and the cases allocate burdens on the parties as follows. When the prevailing party in arbitration seeks confirmation of the award in a secondary jurisdiction, it must provide a copy of the arbitral award and the agreement to arbitrate. 21 U.S.T. 2517, art. IV(1). The nonprevailing party must establish a defense to confirmation, such as a foreign annulment order. See id., art. V(1); Compañía I, 970 F.3d at 1287, 1295-96. The burden then shifts to the prevailing party to show that public policy considerations outweigh comity to the annulment order. See Esso, 40 F.4th at 74. When the nonprevailing party moves under Rule 60(b)(5) to vacate a confirmation judgment based on a subsequent annulment order, it must show it is entitled to this extraordinary relief. See Thai-Lao, 864 F.3d at 182, 186-87; see also Dronsejko, 632 F.3d at 672. Thai-Lao, the only circuit decision to consider the Rule 60(b)(5) procedural posture, suggested that the prevailing party has the burden to show that public policy considerations outweigh comity, even though the party seeking vacatur has the burden to show it is entitled to relief. See 864 F.3d at 186 (“[T]he party opposing vacatur of a judgment enforcing a later-annulled award may show in support of its opposition that giving effect to the judgment annulling the award would offend” public policy.). We need not resolve which party bears the burden on the public policy versus comity question because we can decide this appeal irrespective of which party may bear that burden.
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court here denied the Rule 60(b)(5) motion. Second, the highest Bolivian
constitutional court had rejected annulment of the arbitral award before the
Confirmation Judgment, and GCC initiated new proceedings in Bolivia seeking
annulment after that judgment.13 As the district court determined, this implicates the
United States’ interest in the finality of the arbitral award and the Confirmation
Judgment and also raises questions about the equity of GCC’s conduct. We explore
those issues below.
C. Analysis
GCC argues that the district court (1) applied the incorrect legal standard and
(2) erred in weighing the relevant factors. We disagree. The district court applied
the correct legal standard and reasonably evaluated the factors relevant to resolving a
Rule 60(b)(5) motion based on a later-annulled arbitral award. We cannot say that a
“definite, clear or unmistakable error occurred below.” Jackson, 880 F.3d at 1191
13 The dissent asserts, contrary to the procedural history, that “everyone knew set- aside proceedings were pending in Bolivia” at the time of confirmation, so this case is like Thai-Lao. Dissent at 14-15 n.8; see id. at 46. But in Thai-Lao, the losing party moved for annulment in Malaysia nearly a year before the U.S. district court’s confirmation judgment. 864 F.3d at 175. Here, GCC initiated its queja—which led to the annulment—after the Confirmation Judgment. So this “set-aside proceeding[]” was not pending when the district court entered the Confirmation Judgment. Instead, in December 2016, Bolivia’s highest court had vacated the order annulling the Damages Award. 21-1196, App., Vol. III at 546. And in Compañía I, when we affirmed the Confirmation Judgment, the only “pending” set-aside proceedings were for the trial judge to issue a new damages decision on remand from Bolivia’s highest court. 970 F.3d at 1280.
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(quotations omitted). The district court thus did not abuse its discretion by denying
GCC relief under Rule 60(b)(5).
The Applicable Legal Test
a. Analysis
GCC asserts that the district court applied the wrong legal test when it denied
vacatur. It contends the district court “alter[ed] the . . . [relevant] test in a manner
never adopted by any other court” by concluding that “even though the Bolivian
annulment orders were not repugnant to public policy, vacatur of its own judgment
supposedly would be.” 21-1196, Aplt. Br. at 29; see also Oral Arg. at 01:40-02:11.
The only relevant inquiry, GCC says, is whether the “order itself is repugnant to
fundamental notions of what is decent and just.” 21-1196, Aplt. Br. at 29 (quotations
omitted). We disagree. GCC advances a flawed analysis and a selective reading of
the case law. A district court may decline to enforce a primary jurisdiction’s
annulment order if the order itself is repugnant or if enforcing that order would
offend public policy. The Second Circuit articulated this approach, the Convention
supports it, and we adopt it here.
First, contrary to GCC’s contention that the district court adopted a novel test,
the Second Circuit has applied the same test that the district court applied in this
case. In Pemex, the Second Circuit “h[e]ld that the [district court] properly exercised
its discretion in confirming the [arbitral] award because giving effect to the
subsequent nullification of the award in Mexico would run counter to United States
public policy.” 832 F.3d at 97 (emphasis added). In support of this holding, it said
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that under the Convention, a court may confirm an arbitral award despite a foreign
annulment order “to vindicate fundamental notions of what is decent and just in the
United States.” Id. at 107 (quotations omitted). The court clearly read the
Convention, as we do, to permit a district court to consider whether enforcement of
an annulment order violates public policy.
In Pemex, the Second Circuit recognized “four powerful [public policy]
considerations:
(1) the vindication of contractual undertakings and the waiver of sovereign immunity;
(2) the repugnancy of retroactive legislation that disrupts contractual expectations;
(3) the need to ensure legal claims find a forum; and
(4) the prohibition against government expropriation without compensation.”
Id. (spacing altered). The court did not find the annulment order itself violated these
policies. It instead determined that enforcing the annulment order would offend each
one. First, it said that “[g]iving effect” to the annulment order would undo the parties’
waiver of sovereign immunity in the arbitration agreements, “thereby impairing one of
the core aims of contract law.” Id. at 108 (emphasis added).14 Second, it said that
“[g]iving effect to the nullification would likewise impair the closely-related concept of
14 The court used the words “[g]iving effect to [the] twelfth-hour invocation of sovereign immunity.” Pemex, 832 F.3d at 108 (emphasis added). The Mexican annulment order was based in part on the losing arbitral party’s sovereign immunity argument. See id. at 107-08. The court, referring to the arbitration agreement, said “[t]hat valid waivers must be enforced is settled domestic law. The Supreme Court has blessed contractual waivers of sovereign immunity and accompanying agreements to arbitrate.” Id. at 107.
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avoiding retroactive application of laws.” Id. (emphasis added).15 Third, it said that if
the district court “had recognized and implemented the nullification of the arbitral
award, [the prevailing party at arbitration] would have had no sure forum in which to
bring its contract claims,” a consequence at odds with U.S. public policy and that
“magnifies the injustice.” Id. at 109-10 (emphasis added).16 Fourth, the Mexican law
“frustrated relief that had been granted to [the prevailing party] in the arbitral forum,”
amounting “to a taking of private property without compensation for the benefit of
the government.” Id. at 110.17
15 The annulment order relied on a Mexican law that was enacted after the arbitral tribunal issued a preliminary award and that ended arbitration of certain claims. Pemex, 832 F.3d at 99. The Second Circuit noted its “concern[]” that this law would retroactively cancel the parties’ rights in the arbitration agreement, a “repugnance” to the “[a]nti-retroactivity . . . principle” in U.S. law that “is deeply rooted in Supreme Court jurisprudence” and “embedded in several provisions of the Constitution.” Id. at 108 (quotations and alterations omitted). 16 The court explained that “[a]bsent confirmation of the [arbitral] award,” the prevailing arbitral party “would lose the opportunity to bring its claims” due to a change in Mexican law on the applicable statute of limitations and due to an application of res judicata in Mexico that “offends basic domestic principles of claim preclusion.” Pemex, 832 F.3d at 110. 17 The court expressed concern about causing an unconstitutional taking by enforcing the annulment order, stating the order “did no more than apply th[e] Mexican law,” but “[i]n the United States, [enforcement of this law] would be an unconstitutional taking.” Pemex, 832 F.3d at 110. This and the other public policy concerns discussed above underlie Pemex’s “hold[ing] that the [district court] properly exercised its discretion in confirming the award because giving effect to the subsequent nullification of the award in Mexico would run counter to United States public policy.” Id. at 97 (emphasis added).
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The Second Circuit thus looked beyond the annulment order itself to consider, as
the district court did here, whether “giving effect” or “implement[ing]” the annulment
order would violate public policy. It upheld the district court’s confirmation of the
arbitral award even though the award had been declared a nullity in Mexico. See id.
at 111. “[T]o do otherwise”—that is, enforce the annulment—“would undermine
public confidence in laws and diminish rights of personal liberty and property.” Id.
In Thai-Lao, the Second Circuit reaffirmed that a court may consider whether
“giving effect to the judgment annulling the award would offend” U.S. public policy.
864 F.3d at 186 (emphasis added). Because the issue on appeal was whether the
district court should have vacated confirmation of an arbitral award under
Rule 60(b)(5) by enforcing a foreign annulment order, the relevant inquiry was
whether vacatur would offend U.S. public policy. See id. at 175, 189. The court said
that “[n]o showing ha[d] been made that vacatur [would] offend basic notions of justice
in the United States,” id. at 189, thus confirming that whether giving effect to an
annulment order would violate public policy was a relevant consideration in Thai-Lao, as
it was here. Further support for this point comes from Thai-Lao’s determination that,
unlike the consequence of enforcing the annulment order in Pemex, enforcing “the
Malaysian [order] annulling the [arbitral award] did not leave Petitioners without a
remedy.” Id. at 187 (quotations and alterations omitted).
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In sum, Pemex and Thai-Lao both support the district court’s consideration in
this case of whether enforcing the 2020 Bolivian orders would violate U.S. public
policy. At the very least, they do not foreclose the district court from doing so.18
Second, the district court’s approach was also consistent with the New York
Convention. The Convention encourages “recognition and enforcement” of foreign
arbitral awards. 21 U.S.T. 2517, art. III. But “recognition and enforcement of the
award may be refused” if (1) the award “has been set aside” by the primary
jurisdiction, id., art. V(1)(e); or (2) “[t]he recognition or enforcement of the award
would be contrary to the public policy” of the secondary jurisdiction, id.,
art. V(2)(b).19 The D.C. Circuit has recognized a “public policy gloss” on the set-
18 The Second Circuit decided Esso after oral argument. In a Fed. R. App. P. 28(j) letter, GCC asserts, “Esso refutes . . . that U.S. enforcement can be deemed repugnant.” Doc. 10926658. But Esso does not say that Pemex and Thai-Lao wrongly stated that a district court may uphold an arbitral award when giving effect to a foreign annulment would violate U.S. public policy. Indeed, Esso relies on language from those cases that support a district court’s doing so. See 40 F.4th at 63 (an annulment order “is generally conclusive unless enforcement of the [order] would offend the public policy of the state in which enforcement is sought” (quoting Pemex, 832 F.3d at 106)); id. at 73 (comity to an annulment order is not merited “when enforcing [an arbitral award] is needed to vindicate fundamental notions of what is decent and just in the United States” (quoting Thai-Lao, 864 F.3d at 176) (quotations omitted)). The D.C. Circuit, like Esso, focused on whether a foreign annulment order was repugnant to public policy in Getma, 862 F.3d at 48, and TermoRio, 487 F.3d at 930. But none of these cases said the order itself is the only relevant consideration or that a court would err to consider the public policy consequences of giving effect to an annulment order. And even under GCC’s narrow reading of these cases, they do not bind this court, and we find the treatment of this issue in Pemex and Thai-Lao presented above to be persuasive. 19 See Restatement (Third) U.S. Law of Int’l Comm. Arb. § 4.16 cmt. c (Am. L. Inst. Proposed Final Draft 2019): “The Restatement adopts the general understanding that the [New York and Panama] Conventions’ use of the permissive term 37 Appellate Case: 21-1196 Document: 010110795395 Date Filed: 01/10/2023 Page: 38
aside provision. TermoRio, 487 F.3d at 939. That is, because the Convention
explicitly permits a secondary jurisdiction to refuse to enforce an arbitral award on
public policy grounds, a court may also refuse to enforce the annulment of an arbitral
award on public policy grounds. See id. at 939-40. We agree with this reading of the
Convention.
Third, GCC’s stance effectively ignores that its vacatur motion asked the district
court to enforce the annulment order. Just as CIMSA sought “recognition and
enforcement” of the arbitral award under the Convention, GCC sought recognition and
enforcement of the Bolivian order annulling that award when it moved for vacatur.
“Recognition” and “enforcement” align with our holding that the district court could
consider (1) whether the annulment order itself was contrary to public policy—whether it
should be recognized—and (2) whether giving effect to the annulment would violate
public policy—whether it should be enforced. Indeed, “enforce” means “[t]o give force
or effect to (a law, etc.).” Enforce, Black’s Law Dictionary (11th ed. 2019). “The
recognition of an award is different from its enforcement, therefore, it is possible to
recognize and not enforce an award, but impossible to enforce it without previous
recognition.” Gonzalo Vial, Influence of the Arbitral Seat in the Outcome of an
‘may’ entitles a court to grant recognition or enforcement of an arbitral award even though one or more grounds for withholding such relief has been established.” One of those grounds would be a set-aside order.
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International Commercial Arbitration, 50 Int’l Lawyer 329, 335 (2017). The same can
be said of an annulment order.20
Fourth, GCC’s narrow approach is illogical and impractical. GCC asked the
district court to vacate the Confirmation Judgment because Bolivian courts had annulled
the arbitral award. The court refused because enforcing the annulment would violate
U.S. public policy. GCC argues this consideration should have been irrelevant—all that
matters, GCC says, is whether the Bolivian annulment itself or how it was obtained is
repugnant to U.S. public policy. See 21-1196, Aplt. Br. at 26-27, 29. This cramped view
defies logic because enforcement of an annulment order can undermine U.S. public
policy apart from whether the foreign order should be recognized. And GCC’s view is
impractical because it would render the district court powerless to protect U.S. public
policy in this circumstance. If the district court had granted GCC’s motion and vacated
the Confirmation Judgment, it would have enforced—given effect to—the annulment
order. And if, as the district court found, enforcement would violate U.S. public policy,
that concern weighs against comity to the foreign annulment. The district court thus
20 In DeJoria v. Maghreb Petroleum Exploration, S.A., 935 F.3d 381 (5th Cir. 2019), when deciding whether an American court should recognize and enforce a Moroccan judgment, the Fifth Circuit explained: Recognition is different from enforcement, but the former is necessary for the latter. See Yuliya Zeynalova, The Law on Recognition and Enforcement of Foreign Judgments: Is It Broken and How Do We Fix It?, 31 Berkeley J. Int’l L. 150, 155 (2013) (describing recognition as akin to domesticating the judgement and enforcement as enlisting the courts and law enforcement to aid in collection). Id. at 385 n.2.
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properly considered whether enforcing the 2020 Bolivian orders would violate
U.S. public policy.
We conclude that when a court has been asked to vacate an order confirming
an arbitral award that has later been annulled, it may balance against comity
considerations (1) whether the annulment is repugnant to U.S. public policy or
(2) whether giving effect to the annulment would undermine U.S. public policy.
Although the district court here may have found the 2020 Bolivian orders were not
repugnant, it did not legally err by considering whether giving effect to those orders
through vacatur of its Confirmation Judgment would offend U.S. public policy.
b. Response to the dissent
The dissent asserts that by considering whether enforcing the annulment would
violate public policy, the district court adopted a “novel test” that (1) our sibling circuits
have “consistently rejected” and (2) is inconsistent with the Convention. Dissent
at 25-33. We disagree.
First, our sibling circuits have endorsed—and have never rejected—this test. As
discussed, Pemex framed its entire opinion around this approach: (1) at the outset it
“h[e]ld that the [district court] properly exercised its discretion in confirming the
[arbitral] award because giving effect to the subsequent nullification of the award in
Mexico would run counter to United States public policy,” 832 F.3d at 97; and (2) in its
public policy analysis, it began its discussion of the policy interests by concluding that
“[g]iving effect to” or “implement[ing]” the foreign annulment order would violate
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public policy, id. at 108, 109. Thai-Lao reinforced that a court may consider whether
enforcing a foreign annulment order would violate public policy. Op. at 36-37.
The dissent says those cases are different because the foreign annulment order in
both violated public policy and here the district court concluded the 2020 Bolivian Orders
did not violate public policy. See Dissent at 29-31. But Pemex never said that the
foreign annulment order itself violated public policy.21 In addressing each public policy
consideration, the Second Circuit concluded that “giving effect to” or “implement[ing]”
the annulment order would offend public policy. See Pemex, 832 F.3d at 108-10. Pemex
held that the district court “did not abuse its discretion by confirming the arbitral award
. . . because to do otherwise would” violate public policy. Id. at 111. In other words,
refusing to confirm the arbitral award—enforcing the annulment order—would violate
public policy.22 Thai-Lao, having considered the effect of enforcing the foreign
21 Instead, Pemex said it was “in no position to pass upon [the Mexican] court’s interpretation of Mexican law,” 832 F.3d at 108, and the district court did not “second- guess[]” the Mexican court, id. at 111. 22 The dissent says Pemex held only that enforcing the Mexican judgment would violate public policy “[g]iven [its] concerns with the repugnancy of the [foreign annulment] itself.” Dissent at 29. That reading conflicts with the overarching conclusion in Pemex: “We hold that the [district court] properly exercised its discretion in confirming the award because giving effect to the subsequent nullification of the award in Mexico would run counter to United States public policy . . . .” 832 F.3d at 97. Pemex’s concerns were about enforcement of the annulment order. For example, in concluding that “implement[ing]” the foreign annulment order would leave the prevailing party without a forum, Pemex explained the statute of limitations, not the annulment order, would prevent any future action. 832 F.3d at 109-110. The order itself did not leave the prevailing party without a forum, but enforcement would lead to that result. The dissent also says that Pemex concluded the foreign annulment order “involved retroactive legislation and the taking of private property without compensation.” 41 Appellate Case: 21-1196 Document: 010110795395 Date Filed: 01/10/2023 Page: 42
annulment order by noting the petitioners would not be left without a remedy, 864 F.3d
at 187, held that “vacatur” would not offend public policy, id. at 189. The Second Circuit
never said in Pemex or Thai-Lao that a foreign order itself must violate public policy for
enforcement of that order to violate public policy.
The dissent further claims that even if Pemex and Thai-Lao support considering
whether enforcement violates public policy, in light of Esso, the Second Circuit “no
longer labors under” that “misimpression.” Dissent at 31. But Esso never questioned, let
alone overruled, Pemex’s “hold[ing] that the [district court] properly exercised its
discretion in confirming the [arbitral] award because giving effect to the subsequent
nullification of the award” would violate U.S. public policy. 832 F.3d at 97 (emphasis
added). Nor did it refute Thai-Lao’s affirmance of the district court’s vacatur because
“no showing ha[d] been made that vacatur will offend” U.S. public policy. 864 F.3d
at 189 (emphasis added).
Dissent at 29 (quotations omitted). But Pemex emphasized that the foreign annulment order “specifically stated it was not retroactively applying [Mexican law]” that was not in effect at the time of arbitration. 832 F.3d at 108. Instead, Pemex determined “[t]he sequence of events and the circumstances in which [the law] was enacted thus resulted in a retroactive application . . . as a matter of United States law.” Id. at 108-09. Again, the order itself did not retroactively apply the law, but enforcement of it would. And in discussing the taking, Pemex explained that Mexican law “consigned [the prevailing party] to a forum in which relief was foreclosed.” Id. at 110. That involved a different Mexican law not applied in the foreign annulment order. Thus, enforcement of the order, not the order itself, violated public policy. Even if Pemex could be read as having repugnancy concerns about the annulment order itself, as the dissent contends, the court plainly was primarily concerned with the enforcement of, or giving effect to, the order. 42 Appellate Case: 21-1196 Document: 010110795395 Date Filed: 01/10/2023 Page: 43
Indeed, Esso did not address the many statements in Pemex and Thai-Lao that
support considering whether enforcement of the foreign annulment order would violate
U.S. public policy. See, e.g., Pemex, 832 F.3d at 106 (“[A] final judgment obtained
through sound procedures in a foreign country is generally conclusive unless enforcement
of the judgment would offend the public policy of the state in which enforcement is
sought.”) (quotations and alterations omitted); Thai-Lao, 864 F.3d at 176 (“Pemex also
carved out a ‘public policy’ exception to the comity principle for occasions when
enforcing an arbitral award annulled in the primary jurisdiction is needed to vindicate”
U.S. public policy); id. at 186 (“Of course, consistently with Pemex, . . . [if] giving effect
to the judgment annulling the award would offend” U.S. public policy, the court may
deny vacatur) (emphasis added).23
The dissent also suggests that because the D.C. Circuit focused in its cases on the
foreign annulment order, it has rejected the district court’s approach. See Dissent at
28-29. But as discussed, just because the D.C. Circuit limited its analysis to whether a
foreign annulment order was repugnant to public policy does not foreclose consideration
of whether enforcement would violate public policy. See Op. at 37 n.18.
23 The dissent says “Esso unambiguously understood Pemex to involve a repugnant foreign order.” Dissent at 29-30 n.19. But we see no such “unambiguous[] underst[anding].” Indeed, Esso quotes Pemex’s statement that “[a] final judgment obtained through sound procedures in a foreign country is generally conclusive unless enforcement of the judgment would offend the public policy of the state in which enforcement is sought.” Esso, 40 F.4th at 63 (quoting Pemex, 832 F.3d at 106) (emphasis added); see also id. at 73 (comity to an annulment order is not merited “when enforcing [an arbitral award] is needed to vindicate fundamental notions of what is decent and just in the United States” (quoting Thai-Lao, 864 F.3d at 176) (quotations omitted)).
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In sum, our sibling circuits have not “consistently rejected” a district court’s
consideration of whether enforcing an annulment order would violate public policy, as
the dissent suggests. Dissent at 28. As discussed in detail throughout this opinion, those
cases support, or at least do not foreclose, a district court’s consideration of whether a
foreign annulment order itself or enforcing that order violates public policy.24
Second, the dissent suggests that the Convention prevents courts from considering
whether enforcing a foreign annulment order would violate public policy. It notes the
Convention only “permits a refusal to enforce an award[, not a foreign annulment order,]
on public policy grounds.” Dissent at 26. But, as the dissent also notes, “the majority
correctly explains that United States courts have placed a ‘public policy gloss’ on
Article V(1)(e),” id. at 22, which says “[r]ecognition and enforcement of [an arbitral]
award may be refused” if the award “has been set aside,” 21 U.S.T. 2517, art. V(1)(e).
Indeed, the dissent “agree[s] . . . that the public policy defense . . . forms part of the
international bargain by which signatories agree to recognize other signatories’
24 Thus, unlike the dissent, we see no circuit split. See Dissent at 53-54. Only the Second and D.C. Circuits have decided relevant cases. The Second Circuit cases— especially Pemex and Thai-Lao—support a district court’s consideration of whether enforcement of a foreign judgment would violate U.S. public policy. At the very least, they do not foreclose it, and neither do the D.C. Circuit cases. The dissent claims that these out-of-circuit cases “have addressed the precise substantive question at issue in this case” and “determined the foreign judgment to be the operative focus of potential repugnancy.” Dissent at 53-54 (quotations and emphasis omitted). For the reasons discussed, the cases do not say that. Also, no other circuit has reviewed a district court’s denial of a Rule 60(b)(5) motion to vacate a judgment confirming a foreign arbitral award based on a later foreign annulment order. The unique procedural posture of this case further undercuts the dissent’s claim of a circuit split.
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decisions.” Dissent at 23-24. Because Article V(1)(e) allows a court to refuse
“[r]ecognition and enforcement,” 21 U.S.T. 2517, art. V (emphasis added), a court may
refuse to enforce an annulment order if doing so would violate public policy.
Rule 60(b)(5) Analysis
In addition to its claim of legal error, GCC challenges the district court’s
balancing of the factors relevant to a Rule 60(b)(5) motion.
As discussed, the district court confirmed the Damages Award after Bolivia’s
highest constitutional court had rejected GCC’s attempt to annul that award. After
confirmation, GCC initiated a new attempt in Bolivia to annul the Damages Award
and succeeded. GCC then moved under Rule 60(b)(5) in the district court for vacatur
of the Confirmation Judgment on the ground that the 2020 Bolivian orders annulled
the Damages Award.25
Under the legal framework previously described, in deciding whether to grant
vacatur of a confirmed arbitral award, a district court weighs comity considerations
25 The dissent asserts that this appeal “is ultimately a New York Convention case.” Dissent at 9. But as the dissent appears to acknowledge, the Convention is not self- executing. None of its provisions “operates of itself without the aid of any legislative provision.” Medellin v. Texas, 552 U.S. 491, 505 (2008) (quotations omitted). Instead, the Convention instructs secondary jurisdictions to apply their domestic procedural rules in enforcing the Convention. See 21 U.S.T. 2517, art. III. In the United States, this means the Federal Rules of Civil Procedure. GCC invoked Rule 60(b)(5), which frames our analysis of the substantive law at issue. The dissent states that “[w]hat matters here is not just that the district court has discretion under Rule 60(b)(5), as the majority highlights, but whether its exercise of that discretion comports with the New York Convention.” Dissent at 11. We agree, but what also matters is whether giving effect to the annulment order undermines the interest in finality of the Confirmation Judgment and the arbitral award.
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against whether an annulment order or enforcing that order would be repugnant to
U.S. public policy. “[W]e review [the] district court’s decision to extend or deny
comity to a foreign proceeding for abuse of discretion.” Pemex, 832 F.3d at 100
(quotations omitted). A district court also considers whether, under Rule 60(b)(5),
the movant has shown it is entitled to the extraordinary remedy of vacatur and why
its conduct, as a matter of equity, should allow vacatur. See Thai-Lao, 864 F.3d
at 182; see also Jackson, 880 F.3d at 1191-92. The parties agree that we review the
denial of a Rule 60(b)(5) motion to vacate a confirmation judgment for abuse of
discretion. See 21-1196, Aplt. Br. at 18; 21-1196, Aplee. Br. at 22. As in Thai-Lao, the
abuse of discretion standard of review plays a significant role in our consideration of
this balancing issue. See Thai-Lao, 864 F.3d at 189.
We conclude that the district court did not abuse its discretion. In denying the
Rule 60(b)(5) motion to vacate, the court concluded that (1) giving effect to the 2020
Bolivian orders would offend U.S. public policy and (2) GCC acted inequitably in the
United States and Bolivian proceedings. 21-1196, App., Vol. V at 1212-13. GCC
has failed to show “a complete absence of a reasonable basis” for these
determinations. Jackson, 880 F.3d at 1191.
a. Public policy
i. Analysis
The district court concluded that vacating its Confirmation Judgment would
offend United States public policy, outweighing comity to the 2020 Bolivian orders.
See 21-1196, App., Vol. V at 1212-13, 1218. It said giving effect to those orders
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through vacatur would encourage “proceedings without end.” Id. at 1215-16. The
court explained that when it entered the Confirmation Judgment, there was a “final
resolution” on the Damages Award from Bolivia’s highest constitutional court.
Id. at 1216. In 2016, the PCT had overruled the Twelfth Judge’s annulment of the
Damages Award and directed her to issue a new decision. Id. After the
Confirmation Judgment in 2019, GCC initiated a new attempt at annulment and
ultimately succeeded. Id. at 1216-17.
Based on GCC’s repeated attempts to challenge the Damages Award, the
district court determined that granting GCC relief would undermine the finality of the
Confirmation Judgment and the arbitral award by “encourag[ing] an endless barrage
of challenges to unfavorable arbitral awards or court orders.” Id. at 1216. It said that
“[t]he Supreme Court has long recognized ‘[p]ublic policy dictates that there be an
end of litigation.’” Id. at 1217 (quoting Federated Dep’t Stores, Inc. v. Moitie,
452 U.S. 394, 401 (1981)). The court also discussed the parties’ agreement that
arbitral awards would be final and unappealable, which reenforced the import of
finality. Id. Finality was thus central to the court’s assessment of whether public
policy outweighed comity. See id. at 1212-13, 1217-18.
The district court acted within its discretion. Three strong United States
interests support this conclusion: (1) protecting the finality of judgments,
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(2) upholding parties’ contractual expectations, and (3) the policy in favor of arbitral
dispute resolution.26
First, the Supreme Court has acknowledged “the law’s important interest in the
finality of judgments.” Sanchez-Llamas v. Oregon, 548 U.S. 331, 356 (2006)
(quotations omitted). “Public policy dictates that there be an end of litigation.” James
B. Beam Distilling Co. v. Georgia, 501 U.S. 529, 542 (1991) (quotations omitted). And
this court has explained that “the public gains a strong interest in protecting the
finality of judgments” after they are entered. Nelson v. City of Albuquerque,
921 F.3d 925, 929 (10th Cir. 2019).27 Respecting final judgments protects against
26 As discussed above, Pemex identified the following public policy considerations: “(1) the vindication of contractual undertakings and the waiver of sovereign immunity; (2) the repugnancy of retroactive legislation that disrupts contractual expectations; (3) the need to ensure legal claims find a forum; and (4) the prohibition against government expropriation without compensation.” Pemex, 832 F.3d at 107. The Second Circuit recently made clear in Esso that this list is not exclusive, and a court may weigh other public policy considerations in deciding whether to enforce a foreign annulment order. 40 F.4th at 71-72. 27 The Supreme Court has recognized the importance of finality in a variety of contexts, see, e.g., Concepcion v. United States, 142 S. Ct. 2389, 2398 n.3 (2022) (“No one doubts the importance of finality.”); McCleskey v. Zant, 499 U.S. 467, 491 (1991) (“importance of finality” in habeas context); Coleman v. Thompson, 501 U.S. 722, 750 (1991) (“important interest in finality” in state criminal litigation); Murray v. Carrier, 477 U.S. 478, 491 (1986) (emphasizing importance of finality of judgments); Strickland v. Washington, 466 U.S. 668, 693 (1984) (noting the “profound importance of finality in criminal proceedings”), and this court has as well, see, e.g., Pelt v. Utah, 539 F.3d 1271, 1289 (10th Cir. 2008) (“[W]e recognize the importance of finality of judgments.”); Ute Indian Tribe of the Uintah and Ouray Rsrv. v. State of Utah, 114 F.3d 1513, 1520 (10th Cir. 1997) (recognizing “importance of finality” in deciding whether to modify decision); Gilbert v. Scott, 941 F.2d 1065, 1067 (10th Cir. 1991) (“importance of finality served by state procedural rules”) (quotations omitted); Bender v. Clark, 744 F.2d 1424, 1426 (10th Cir. 1984) (“The purpose of the finality requirement [in 28 U.S.C. § 1291] is to avoid piecemeal review.”). Although the nature and weight of finality may vary in 48 Appellate Case: 21-1196 Document: 010110795395 Date Filed: 01/10/2023 Page: 49
“the costs, uncertainty, and even disrespect reflected by repeated and otherwise
unfounded challenges to [courts’] judgments.” Thai-Lao, 864 F.3d at 188.
Rule 60(b)(5) supports this interest by providing only limited grounds for vacatur.
See Cessna Fin. Corp. v. Bielenberg Masonry Contracting, Inc., 715 F.2d 1442, 1444
(10th Cir. 1983) (a Rule 60(b) motion “must be considered with the need for finality
of judgment”); Wright & Miller § 2851 (“Generally, the cases interpreting Rule 60(b)
have reflected the courts’ preference for finality.”).
Here, GCC attempted to undo the Confirmation Judgment, which the district
court entered after Bolivia’s highest constitutional court had rejected GCC’s attempt
to annul the Damages Award.28 After the district court issued the Confirmation
different procedural contexts, as we explain above, the district court’s reliance on finality to deny vacatur of the Confirmation Judgment under Rule 60(b)(5) was not an abuse of discretion. 28 The dissent says “[i]f the district court anchored its finality concerns to the 2016 PCT Orders, this would be problematic” because “the 2016 PCT Orders were both conflicting” and “the district court simply selected one of the two as its reference point.” Dissent at 45. But the district court based the finality analysis on its Confirmation Judgment. And the district court followed Compañía I, which affirmed the Confirmation Judgment based on the December 2016 PCT Judgment. See 970 F.3d at 1280. We explained “the PCT . . . found that the Twelfth Judge had violated CIMSA’s constitutional rights [by annulling the damages award], and remanded for further proceedings.” Id. The dissent also overlooks that the PCT had twice determined that the two judgments did not conflict. In the December 2016 PCT Judgment, the PCT determined that judgment could not conflict with the November 2016 PCT Order. 21-1196, App., Vol. III at 537-39. In a January 2017 clarification order—requested by GCC—the PCT again held “there was no potential for contradiction” between the two PCT decisions. 21-1196, App., Vol. IV at 809.
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Judgment, GCC initiated a new challenge to the Damages Award leading to a queja.29
A separate chamber of the PCT reversed the 2016 decision that had rejected
annulment of the Damages Award.
The district court appropriately considered GCC’s actions leading to its
vacatur motion. In every case affirming a district court’s decision not to confirm an
arbitral award due to a foreign court’s annulment, the movant had sought annulment
in the primary jurisdiction before confirmation of the arbitral award in the United
States. See Esso, 40 F.4th at 65-66 (trial court in primary jurisdiction annulled
arbitral award before U.S. confirmation action filed); Thai-Lao, 864 F.3d at 179-80
(nonprevailing party sought annulment of arbitral award in primary jurisdiction
before the U.S. district court confirmed arbitral award); Getma, 862 F.3d at 48
(nonprevailing party sought annulment of arbitral award before U.S. district court
confirmed the award); TermoRio, 487 F.3d at 929-30 (primary jurisdiction annulled
arbitral award before U.S. confirmation action filed). And in Pemex, the Second
Circuit affirmed the district court’s re-confirmation of an arbitral award despite a
foreign annulment order when the movant brought its first challenge to the arbitral
award in Mexico after confirmation. 832 F.3d at 99. Here, unlike any of those cases,
the highest Bolivian court had rejected annulment of the Damages Award years
29 The district court’s concern about “an endless barrage of challenges to unfavorable arbitral awards or court orders,” 21-1196, App., Vol. V at 1216, aligns with the finality principle embodied in 28 U.S.C. § 1291 to avoid piecemeal litigation, Clark, 744 F.2d at 1426, and with the res judicata principle of respecting final judgments—here, the Confirmation Judgment, Katz v. Gerardi, 655 F.3d 1212, 1218 (10th Cir. 2011).
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before the district court confirmed it, and then GCC launched a new attempt at
annulment after confirmation.30
Based on the facts of this case, the district court acted within its discretion to
conclude that the U.S. interest in finality outweighed comity concerns.31
30 In Pemex and this case, the district court declined to enforce an order annulling an arbitral award. The Second Circuit in Pemex, deferring to the district court’s balancing of comity and public policy, held the district court did not abuse its discretion. The different procedural posture of this case compared to Pemex should make our deference to the district court stronger because GCC sought to undo a judgment. In Pemex, the prevailing arbitral party asked the district court to confirm an arbitral award despite the presence of an annulment order. Here, by contrast, the district court had already confirmed the arbitral award after Bolivia’s highest constitutional court had refused to annul it, this court had affirmed the confirmation in Compañía I, and then GCC, the losing arbitral party, asked the district court to vacate the confirmation judgment—an extraordinary remedy under Rule 60(b)(5)—based on a post-confirmation annulment order. 31 GCC asserts the district court: Improperly “rested its finality analysis on the supposed finality of the December 2016 PCT [Judgment].” 21-1196, Aplt. Br. at 35. In fact, its finality analysis “rested” on the finality of its Confirmation Judgment. “Ignored” that the 2016 PCT Order had remanded for further proceedings. 21-1196, Aplt. Br. at 35. In fact, the district court addressed the remand. 21-1196, App., Vol. V at 1216. “Import[ed] U.S. law on how precedent should be treated into the Bolivian legal system,” 21-1196, Aplt. Br. at 37, and used “finality” as nothing more than a shorthand for disagreeing with the highest Bolivian court. Id. In fact, the district court assumed that the 2020 PCT Order overturned the 2016 PCT Order and was not repugnant. 21-1196, App., Vol. V at 1215. Its denial of vacatur stemmed from the U.S. public policy consequences of enforcing the 2020 Bolivian orders. Incorrectly relied on finality to “treat[] the PCT decisions as repugnant to fundamental notions of justice.” 21-1196, Aplt. Br. at 37-38. But the district court “did not consider the 2020 orders themselves to be repugnant.” 21-1196, App., Vol. V at 1215.
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Second, public policy favors upholding the parties’ contractual expectations in
the arbitration context, including the finality of arbitral awards. “The principal
purpose of the [Federal Arbitration Act (“FAA”)] is to ensure that private arbitration
agreements are enforced according to their terms.” AT&T Mobility LLC v.
Concepcion, 563 U.S. 333, 344 (2011) (quotations and alterations omitted). That
principle also underlies the Convention, as the Supreme Court has explained that
“[t]he goal of the Convention, and the principal purpose underlying American
adoption and implementation of it, was to encourage the recognition and enforcement
of commercial arbitration agreements.” Scherk, 417 U.S. at 520 n.15; see also
9 U.S.C. § 201 (FAA’s statutory implementation of the Convention). When
“enforcing an agreement to arbitrate or construing an arbitration clause, [we] must
give effect to the contractual rights and expectations of the parties” because, “as with
any other contract, the parties’ intentions control.” Stolt-Nielsen S.A. v. AnimalFeeds
Int’l Corp., 559 U.S. 662, 682 (2010) (quotations omitted). We enforce agreements
to allow parties to “foretell with accuracy what will be their rights and liabilities
under the contract.” Yavuz v. 61 MM, Ltd., 465 F.3d 418, 428 (10th Cir. 2006)
(quotations omitted).
Other courts have honored parties’ contractual expectations in declining to
give effect to a foreign court’s annulment of an arbitral award. See Pemex, 832 F.3d
at 107-08 (affirming district court’s denial of vacatur in part to “vindicat[e] [the
parties’] contractual undertakings” and support “investment-backed expectation[s] in
contracting”); id. at 108 (noting concern that “[g]iving effect to the nullification”
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“would deprive [the prevailing party at arbitration] of its contract rights”); In re Arb.
Between Chromalloy Aeroservices & Arab Republic of Egypt, 939 F. Supp. 907, 913
(D.D.C. 1996) (refusing to recognize foreign annulment in part because parties had
agreed that arbitration would be final and not subject to appeal).
Here, “the parties’ agreement demonstrates that the arbitration award became
binding upon issuance for purposes of the New York Convention.” Compañía I,
970 F.3d at 1300. In the Shareholder Agreement, the parties agreed that arbitral
awards “shall be final and of mandatory compliance” and “waive[d] all actions for
annulment, objection, or appeal against that award.” 21-1196, Suppl. App. at 2. The
district court’s denial of vacatur comports with “[t]he principal purpose of the
[FAA],” AT&T Mobility, 563 U.S. at 344, by respecting the parties’ clear agreement
to the finality of arbitral awards.32
Third, pointing to the Convention, the Supreme Court has recognized the
“emphatic federal policy in favor of arbitral dispute resolution” that “applies with
special force in the field of international commerce.” Mitsubishi, 473 U.S. at 631.
A corollary to the policy favoring enforcement of agreements to arbitrate is a strong
interest in enforcing the resulting award. See Bowen v. Amoco Pipeline Co., 254 F.3d
925, 935 (10th Cir. 2001) (“[C]ourts must not only enforce the agreements to
32 GCC asserts we should disregard the parties’ agreement that arbitral awards would be final because “U.S. courts uniformly hold that this language does not insulate such judgments from judicial review.” 21-1196, Aplt. Br. at 38 (quotations omitted). Even so, the parties’ agreement still supports the parties’ expectation that arbitral awards would be final and is an appropriate consideration for judicial review.
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arbitrate but also enforce the resulting arbitration awards.”). This public policy
applies to the Arbitral Tribunal’s award of damages to CIMSA in 2015.
The interests in the finality of judgments, respecting parties’ contractual
expectations, and the U.S. policy favoring arbitral dispute resolution support the
district court’s conclusion that vacatur of its Confirmation Judgment would violate
U.S. public policy. These considerations correspondingly support the district court’s
decision against extending comity to the 2020 Bolivian orders. The district court
entered a Confirmation Judgment following a final judgment from Bolivia’s highest
constitutional court refusing to annul the Damages Award. Only after the
Confirmation Judgment did GCC initiate a new challenge, its fourth, to the Damages
Award. The district court acted within its discretion to find that public policy
concerns about enforcing the 2020 Bolivian orders outweighed according comity to
those orders.
ii. Response to the dissent
The dissent contends that (1) finality is not a valid public policy consideration,
(2) the district court undervalued comity, and (3) we misconstrue the parties’ arbitration
agreement. None of these arguments has merit.
1) Finality
The dissent “question[s]” whether finality is a proper public policy consideration
as a matter of law. See Dissent at 44. Although it admits that “GCC’s litigation conduct
may implicate interests under Rule 60(b)(5),” the dissent claims those interests are “not a
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matter of United States public policy.” Id. at 46-47. And although the dissent recognizes
that “[t]he Supreme Court assigns the assessment of public policy to judges,” id. at 39, it
argues that the New York Convention narrows the range of public policy considerations
the district court may weigh. The dissent offers no support for these statements.
The Supreme Court and Tenth Circuit cases cited earlier recognize a strong
interest in finality. And in Thai-Lao, the only other case concerning the Convention and
Rule 60(b)(5), the Second Circuit recognized the interest in “preserving the finality of
judgments.” 864 F.3d at 186. As for the Convention, it does not define “public policy”
and says nothing about what counts as a valid public policy concern. See Restatement
(Third) U.S. Law of Int’l Comm. Arb. § 4.16 cmt. a. Instead, the Convention provides
that in determining whether to enforce an arbitration award, a secondary jurisdiction must
assess its own public policy, not the public policy of the primary jurisdiction. See
21 U.S.T. 2517, art. V(2) (a court in “the country where recognition and enforcement is
sought” may consider whether “recognition or enforcement of the award would be
contrary to the public policy of that country”) (emphasis added).33
33 The dissent states that we have crafted a “new permissive” and “unbounded” “approach” in which “a public policy under Rule 60(b)(5) is identical to the term ‘public policy’ used in Article V(2)(b) of the New York Convention.” Dissent at 44 and 44 n.22. That is not what we have said and is not our intent. We hold only that finality was a valid public policy interest for the district court to consider in this case, as demonstrated by the ample support cited above, including Thai-Lao, 864 F.3d at 186.
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2) Comity
The dissent accuses the district court of “neglect[ing] to situate comity as the
‘guiding value’ against which to weigh the proffered public policy interest under the
Convention.” Dissent at 33 (quoting Esso, 40 F.4th at 74); id. at 39 (“The district court
should have started its balancing inquiry with comity considerations at their zenith.”).
We disagree and find no such error.
In providing legal background, the district court said: “The Convention’s implicit
concerns for comity must be considered and deference must generally be afforded to the
decision of a competent authority in the primary jurisdiction.” 21-1196, App., Vol. V
at 1210. Indeed, it relied on the same authority as the dissent does. Compare id. (“The
annulment of an arbitral award in the primary jurisdiction should be given significant
weight.” (quoting Thai-Lao, 864 F.3d at 186)), with Dissent at 14 (foreign annulment
should “weigh heavily”) (quoting Thai-Lao, 864 F.3d at 186). The district court
emphasized it could confirm an annulled award only under “narrow circumstances.”
21-1196, App., Vol. V at 1210-11 (quotations omitted); see id. at 1211 (recognizing a
“narrow public policy” exception to comity). The dissent seems to recognize this, saying
“[t]he district court . . . accurately articulated” this “as a narrow public policy exception.”
Dissent at 24 (quotations omitted).
In its Rule 60(b)(5) analysis, the district court again stressed the “narrow public
policy exception to the principle of comity under the New York Convention.” 21-1196,
App., Vol. V at 1212; see id. (“[C]ompelling circumstances [must] exist to justify the
enforcement of an arbitral award that has been set aside by a competent authority.”). The
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court recognized the import of comity and the narrow circumstances under which an
annulment order may not be accorded comity.34
The dissent repeatedly uses the term “presumption of comity,” Dissent at 7, 8,
34, 37, 39, 43, 48, which does not appear in the Convention or any of the cases
discussed here. Indeed, Thai-Lao said:
The Convention’s concern for comity is thus only one of the considerations to be taken into account in deciding a Rule 60(b)(5) motion. Accordingly, courts acting on Rule 60(b)(5) motions that are based on later-annulled arbitral awards must not simply treat the annulment as dispositive of the Rule 60(b)(5) analysis. They should analyze the full range of Rule 60(b) considerations, including the weighty interests served by protecting the finality of judgments of our courts, and must be attentive to the fact that the burden of demonstrating that vacatur is appropriate lies with the party seeking that result.
864 F.3d at 186-87. Pemex described comity as a “prudential concern.” 832 F.3d
at 106. No one disputes that a foreign order setting aside the award is entitled to
34 The dissent asserts that we “say[] comity is not a command.” Dissent at 37. Confusingly, it points to our direct quote of Hilton v. Guyot, 159 U.S. 113 (1895), which the dissent also cites. See Op. at 77: Comity is “neither a matter of absolute obligation . . . nor of mere courtesy and good will.” (quoting Hilton, 159 U.S. at 163-64); Dissent at 35-36. And we explained a district court must “generally accord[] comity to the foreign annulment order.” Op. at 30; see also id. (“[A] foreign annulment is generally conclusive unless enforcement of the annulment would offend the public policy of the state in which enforcement is sought.” (quotations and alterations omitted)). (Our quote of Hilton appears in our discussion of GCC’s appeal of the turnover order, which the dissent does not address. See Dissent at 1 n.1.)
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comity, and in that sense comity is presumed. But this does not foreclose the court
from weighing a competing public policy concern.35
3) The parties’ arbitration agreement
The dissent suggests we are “frustrat[ing]” the parties’ “agree[ment] to arbitrate
under Bolivian . . . law.” Dissent at 48-49. But the dissent’s view instead would frustrate
the parties’ agreement, which provides that all arbitral awards are final, and which was
key to our determination in Compañía I that the Damages Award was binding.
Compañía I said: “[T]he parties’ agreement demonstrates that the arbitration award
became binding upon issuance for purposes of the New York Convention” because the
parties “expressly waive[d] all actions for annulment, objection, or appeal against the
award.” 970 F.3d at 1300 (quotations omitted). We also noted that the parties agreed to
“the use of IACAC arbitration rules,” which “provided that the award . . . shall be final
and binding on the parties and subject to no appeal.” Id. (quotations and alterations
35 The dissent cites decisions from foreign jurisdictions “to better discern the Convention’s meaning.” Dissent at 19. They are, of course, not binding here, and at least two of those cases acknowledge that a secondary jurisdiction has discretion to enforce an arbitral award despite a set-aside order. See, e.g., LCivA 44/21 B.I. Science (2009) Ltd. v. Luminati Networks Ltd. (2021), Judgment of the Supreme Court of Israel, 21 Apr. 2021 (jusmundi.com), at 8 (while “[i]n general, setting aside the arbitral award in the Original Country bars its enforcement and recognition in a foreign country,” “the court [in the secondary jurisdiction] has discretion in the matter, and is able to recognize and enforce the arbitral award even though it was set aside in the Original Country”); Malicorp v. Government of the Arab Republic of Egypt [2015] EWHC 361, ¶ 22 (a secondary jurisdiction tribunal should “give effect to” an annulment order “unless it offends . . . domestic concepts of public policy”) (quotations omitted).
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omitted). We fail to see how the parties’ agreement to arbitrate under Bolivian law
affects their agreement that arbitral awards would be final.
The dissent also “assume[s] CIMSA . . . knew the possibility of appeal through the
Bolivian judicial system.” Dissent at 49. But CIMSA protected against that possibility
through its contract with GCC. At that time, the parties bargained for binding
arbitration. See 21-1196, Suppl. App. at 2. They agreed arbitral awards “shall be final
and of mandatory compliance” and “waive[d] all actions for annulment, objection, or
appeal against the award.” Id. The “possibility of appeal” would violate that clear
choice of forum and agreement to finality. The parties agreed to international arbitration,
the international rules provided awards would be final, and the Convention requires
“[e]ach Contracting State shall recognize arbitral awards as binding.” 21 U.S.T.
2517, art. III.36
36 The dissent also addresses the interest in enforcing arbitral awards, saying this “pro-enforcement bias . . . is better understood as a pro-comity bias” because “[t]he extension of comity is a first principle of the Convention.” Dissent at 50. But the Convention says “[e]ach Contracting State shall recognize arbitral awards as binding,” 21 U.S.T. 2517, art. III, and that “[r]ecognition and enforcement of [an] [arbitral] award may be refused” if it “has been set aside,” id., art. V(1)(e). The dissent’s “bias” characterizations do not stand up under the Convention’s mandatory language for enforcement of arbitral awards and permissive language for extending comity to a foreign annulment order. See Restatement (Third) U.S. Law of Int’l Comm. Arb. § 4.16 cmt. b (Am. L. Inst. Proposed Final Draft 2019) (“As with other grounds for granting or denying recognition or enforcement, public policy is interpreted in light of the presumption in favor of effectuating [arbitral] awards.”); see also Pemex, 832 F.3d at 105 (The Convention “evince[s] a pro-enforcement bias” for “foreign arbitral awards.” (quotations omitted)).
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We have no quarrel with the dissent about the importance of comity. Had we
considered the Rule 60(b)(5) motion as a district court in the first instance, we may have
found that comity outweighed any competing public policy concerns and granted the
motion. But we review only for abuse of discretion and “may not substitute our own
judgment for that of the trial court.” Mid-Continent Cas. Co. v. Vill. at Deer Creek
Homeowners Ass’n, Inc., 685 F.3d 977, 981 (10th Cir. 2012) (quotations omitted). For
the reasons discussed, we cannot say there is “a complete absence of a reasonable basis”
in the district court’s decision. Jackson, 880 F.3d at 1191 (quotations omitted).
b. Equitable conduct
GCC also challenges the district court’s conclusion that its conduct in the
Bolivian and United States proceedings weighed against Rule 60(b)(5) relief. See
21-1196, App., Vol. V at 1218-19. The district court made clear that the U.S. public
policy interests in preserving the Confirmation Judgment were sufficient to deny
GCC’s motion. It discussed GCC’s conduct insofar as it “reinforced” denial of relief.
Id. at 1218.
We find no abuse of discretion in the district court’s additional analysis
finding that GCC’s conduct also weighed against relief. The record supports the
court’s conclusion that GCC acted inequitably by (1) initiating another challenge to
the Damages Award in Bolivian courts only after its efforts against enforcement of
the arbitral award in the United States failed and (2) delaying proceedings in the
United States by frustrating service of process for nearly three years and refusing to
satisfy the arbitral award. See Suppl. App. at 46-48.
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i. GCC’s conduct in Bolivia
The district court did not abuse its discretion in concluding that GCC acted
inequitably in the Bolivian proceedings in relation to the United States’ proceedings
because it “slept on its rights.” 21-1196, App., Vol. V at 1218. GCC “waited until
its efforts to defend against enforcement in the United States were unsuccessful”
before it initiated a new challenge to the Damages Award leading to a queja. Id.
It waited until May 2019—after the district court had confirmed the award against
it—to initiate yet a fourth, new attempt in the Bolivian courts to set aside the
Damages Award.37 Id. at 1218-19.
As discussed, the 2020 PCT Order was based on a challenge that GCC
initiated after the district court confirmed the Damages Award. 21-1196, App.,
Vol. III at 614; 21-1196, App., Vol. IV at 813. Not only did GCC wait to pursue its
queja, but the PCT had previously rejected the arguments presented in that queja.
Years before GCC filed its May 2019 queja, the PCT had twice refused to invalidate
the Second Amparo (and thereby the Damages Award) based on GCC’s argument that
it was duplicative of the First Amparo. 21-1196, App., Vol. III at 524-25, 538-39;
21-1196, App., Vol. IV at 808-09. Nonetheless, GCC asserted again in its post-
37 As previously discussed, (1) GCC filed an action to annul the Damages Award. 21-1196, App., Vol. II at 383. After the PCT rejected annulment, GCC also (2) unsuccessfully challenged the constitutionality of Bolivia’s arbitration law and (3) argued the Twelfth Judge lacked jurisdiction to enter a Damages Award decision because a different Bolivian trial judge had annulled the Merits Award. 21-1196, App., Vol. V at 1203-04.
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confirmation queja that the Second Amparo was duplicative of the First Amparo and
therefore invalid. 21-1196, App., Vol. IV at 704-05, 712-14, 813-15. GCC thus
continued raising the same challenges in Bolivia until it received the answer it
wanted.
GCC’s justification for its delay rings hollow. GCC asserts it “did not bring
[its queja] any sooner only because it thought it had already prevailed in obtaining a
[Bolivian] judgment setting aside the Merits Award” in January 2017. 21-1196,
Aplt. Br. at 41. But in Compañía I, we rejected GCC’s argument that the January
2017 order set aside the Merits Award. 970 F.3d at 1298.38 And GCC’s conduct in
the Bolivian courts undercuts this argument. In April 2017, GCC initiated a new
attack on the Damages Award after it believed the Merits Award was set aside.
21-1196, App., Vol. IV at 809-10.
GCC’s other arguments are also unpersuasive. It contends that in Thai-Lao,
the arbitration loser’s delay in asking a Malaysian court to set aside an arbitral award
did not amount to inequitable conduct, so GCC’s delay in filing the queja should not
count against it. 21-1196, Aplt. Br. at 40-41. But recall that Thai-Lao reviewed a
38 GCC failed to inform this court in Compañía I that it had filed a queja. In its briefing, GCC represented that “proceedings regarding the annulment of the Damages Award remain[ed] pending” because it had argued to the Twelfth Judge that she “lacked jurisdiction to rule on the Damages Award because it was effectively nullified by the annulment of the Merits Award.” 19-1151, Aplt. Br. at 10. But GCC never mentioned that it had initiated a new queja or appealed to the PCT. Now GCC seeks to benefit from the fact that the queja was pending during Compañía I. It argues here that “[h]ad the 2020 PCT Order issued only a few weeks earlier, this Court could have considered it” in Compañía I. 21-1196, Aplt. Br. at 34.
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grant of Rule 60(b)(5) relief for abuse of discretion, which included the consideration
of inequitable conduct. Thai-Lao, 864 F.3d at 187-88. Here, we are reviewing a
denial for abuse of discretion. Further, there the arbitration loser sought to annul the
arbitral award in Malaysia only once, approximately a year after the arbitral award
was issued and before the district court confirmed the award. Thai-Lao, 864 F.3d
at 175, 180. Here, GCC attempted and failed to annul the Damages Award in Bolivia
before the Confirmation Judgment. And then it sought annulment again after the
Confirmation Judgment, more than four years after the Damages Award.
GCC also argues that by considering its conduct in Bolivian proceedings,
United States courts are “polic[ing] the litigation conduct of parties in foreign
courts,” 21-1196, Aplt. Br. at 40, and “micromanag[ing] foreign court deadlines,”
21-1196, Aplt. Reply Br. at 22. The district court’s analysis was hardly
“micromanaging.” The court would have been remiss to ignore GCC’s conduct in
Bolivia given that GCC sought extraordinary relief here under Rule 60(b)(5) based on
proceedings it initiated in Bolivia. Indeed, Thai-Lao evaluated the movant’s conduct
in Malaysian proceedings. See Thai-Lao, 864 F.3d at 187. “Rule 60(b) gives the
court a grand reservoir of equitable power to do justice in a particular case.”
Manzanares, 628 F.3d at 1241. A district court may consider a movant’s conduct in
both foreign and domestic tribunals. See Amoco, 231 F.3d at 698-99.
ii. GCC’s conduct in the United States
The district court also determined that GCC acted inequitably in the United
States proceedings by frustrating service of process and failing to satisfy the arbitral
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award. 21-1196, App., Vol. V at 1219. The court explained that CIMSA’s inability
to serve GCC at its publicly listed address significantly delayed confirmation of the
Damages Award. Id. It further noted that after the Confirmation Judgment, GCC
“repeatedly asked for a stay while refusing to post a supersedeas bond” and made no
effort to satisfy the arbitral award despite its substantial business activity in the
United States. Id.
The district court acted within its discretion in concluding GCC acted
inequitably in the United States proceedings. The court was well-situated to assess
how GCC’s actions affected the proceeding before it. We noted in Compañía I that
CIMSA was unable to serve GCC in Mexico for nearly two years because GCC’s
offices were not located at its published address. 970 F.3d at 1280. And GCC
refused to authorize its United States counsel to accept service on its behalf. See
21-1196, App., Vol. I at 158 ¶ 18. CIMSA thus moved to effect alternative service
on GCC’s United States counsel, which the district court granted. Compañía I,
970 F.3d at 1280.
In addition, GCC repeatedly shunned its obligation to satisfy the Damages
Award. On multiple occasions, it sought to stay execution of the Confirmation
Judgment without posting a supersedeas bond. Dist. Ct. Docs. 108, 202, 239. Under
the Federal Rules, “a party may obtain a stay by providing a bond or other security.”
Fed. R. Civ. P. 62(b). We have explained that “[a] party against whom judgment is
entered may either satisfy the judgment or post a supersedeas bond.” United Int’l
Holdings, Inc. v. Wharf (Holdings) Ltd., 210 F.3d 1207, 1237 (10th Cir. 2000), aff’d, 532
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U.S. 588 (2001). Because GCC did not satisfy the judgment or post bond, the district
court ordered GCC to turn over certain assets to the court’s registry. See 21-1324,
App., Vol. VII at 1813. GCC challenged the Turnover Order before a Mexican court,
which enjoined GCC and its affiliates from complying with the Order. See 21-1196,
Doc. 10875458. GCC’s pursuit of a foreign court order stating that it could not
comply with the Turnover Order interfered with the United States proceedings.
GCC had the burden to show it was entitled to relief under Rule 60(b)(5). Its
conduct in both the Bolivian and United States proceedings appropriately informed
the district court, which did not abuse its discretion by concluding that GCC’s
conduct provided an additional basis for denying it relief.
D. Conclusion
The district court acted within its discretion in declining to grant GCC the
extraordinary relief of vacatur under Rule 60(b)(5). It applied the correct legal
standard by considering whether the 2020 Bolivian orders or giving effect to those
orders would offend U.S. public policy. And it reasonably concluded that (1) vacatur
would offend United States public policy to the point of outweighing comity to the
2020 Bolivian orders and (2) GCC’s conduct also supported denial of relief under
Rule 60(b)(5). We do not “find[] a complete absence of a reasonable basis” in the
court’s decision, nor can we be “certain that the decision is wrong.” Jackson, 880
F.3d at 1191. We thus affirm.
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III. CASE NO. 21-1324 – TURNOVER ORDER
GCC challenges the Turnover Order, arguing that (1) Colorado’s turnover rule
does not allow a court to order turnover of property held by third parties abroad,
(2) the Turnover Order is an impermissible extraterritorial application of United
States law, and (3) the district court should have abstained from entering the
Turnover Order on international comity grounds. These arguments are unavailing.
The district court did not abuse its discretion by entering the Turnover Order, and we
affirm.
A. Additional Procedural History
GCC challenged the Arbitral Tribunal’s decisions not only in Bolivia but also
in Mexico. GCC contends that the resulting 2014 and 2021 Mexican court orders
support its challenge to the Turnover Order. We summarize those orders and the
U.S. district court turnover proceedings.
2014 Mexican Injunction
Following the 2013 arbitral Merits Award, GCC, proceeding ex parte, asked a
Mexican court to stay the damages phase of the arbitration. 21-1324, App., Vol. V
at 1191. On December 3, 2014, the court “provisionally” (1) enjoined CIMSA from
commencing any proceedings to confirm any arbitral award and (2) suspended the
arbitration damages proceeding (the “2014 Mexican Injunction”). Id. at 1203-04.
The Arbitral Tribunal in Bolivia concluded that the Mexican court lacked jurisdiction
to issue the injunction, disregarded it, and ultimately issued the Damages Award.
21-1324, App., Vol. VII at 1810.
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United States Turnover Proceedings
Approximately six months after the 2019 Confirmation Judgment, CIMSA
sought an order requiring GCC to turn over certain assets to the court’s registry to
satisfy the Damages Award. 21-1324, App., Vol. IV at 960. The district court stayed
consideration of CIMSA’s request pending our resolution of Compañía I. 21-1324,
App., Vol. V at 1288-90. After that decision issued, the parties provided
supplemental briefing regarding a turnover order. See 21-1324, App., Vol. VI
at 1528, 1612; 21-1324, App., Vol. VII at 1726.
In September 2021, the district court granted CIMSA’s motion and issued the
Turnover Order under Colorado Rule of Civil Procedure 69(g).39 21-1324, App.,
Vol. VII at 1808-09, 1834. It directed GCC to turn over the following assets located
in Mexico: (1) publicly traded common stock held in GCC’s corporate treasury;
(2) funds held by GCC’s in-house bank, Cementos de Chihuahua, S.A. de C.V.; and
(3) interest payments due on nine intercompany loans to GCC’s subsidiaries.
Id. at 1808-09.
2021 Mexican Injunction
GCC, again proceeding ex parte, next asked a Mexican trial court, the Mexico
City Superior Court, whether it was obligated to comply with the Turnover Order.
39 As we explain below, in proceedings involving execution on a money judgment, a federal court applies the rules of procedure of the state where it is located. Fed. R. Civ. P. 69(a). Here, the district court was in Colorado, so Colorado rules of civil procedure applied.
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See Aplt. Reply Br. Addendum at 2. On November 23, 2021, a Mexican trial judge
enjoined GCC and other affiliated Mexican entities from complying with the
Turnover Order, the Confirmation Judgment, or any other decisions requiring GCC to
pay the Damages Award (the “2021 Mexican Injunction”). Id. at 2-4. Because the
2021 Mexican Injunction was issued after the Turnover Order, the U.S. district court
never considered it because GCC had already brought this appeal. Id. at 1. GCC’s
opening brief does not mention that it had initiated proceedings in Mexico after the
Turnover Order.40
B. Standard of Review
Courts review a district court’s entry of a turnover order for abuse of
discretion. Jiao v. Xu, 28 F.4th 591, 599 (5th Cir. 2022); Divane v. Krull Elec. Co.,
194 F.3d 845, 848 (7th Cir. 1999). We review a district court’s refusal to accord
comity to a foreign court’s order for abuse of discretion. In re Colorado Corp.,
531 F.2d 463, 468-69 (10th Cir. 1976); Cincinnati Ins. Co. v. AMSCO Windows,
593 F. App’x 802, 811 (10th Cir. 2014) (unpublished) (cited as instructive under
10th Cir. R. 32.1 and Fed. R. App. P. 32.1). A district court abuses its discretion
when it (1) “fails to consider the applicable legal standard,” (2) relies on clearly
erroneous factual findings, or (3) lacks a reasonable basis in the evidence to support
its ruling. Jackson, 880 F.3d at 1191.
40 Because GCC filed its opening brief on November 16, 2021, five days before the 2021 Mexican Injunction issued, it first mentioned the injunction in its reply brief.
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C. Legal Background
The district court entered the Turnover Order under Colorado Rule of Civil
Procedure 69(g). We previously reviewed a turnover order issued under that rule in
Wharf. We provide background on (1) the applicable federal and state procedural
rules and (2) Wharf.
Applicable Rules of Civil Procedure
Federal Rule of Civil Procedure 69(a) states: “The procedure on execution [on
a money judgment]—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
. . . .” It “defers to state law to provide methods for collecting judgments.” Mackey
v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 834 (1988). Rule 69(a) thus
“unambiguously permits a federal district court sitting in Colorado to reference and
apply Colorado law in ‘proceedings on and in aid of execution.’” Wharf, 210 F.3d
at 1235 (quoting Fed. R. Civ. P. 69(a)).
Under Colorado law, a prevailing party is “entitled to employ supplemental
proceedings in aid of execution to collect [on a] judgment.” First Nat. Bank of
Denver v. Dist. Ct. In & For City & Cnty. of Denver, 652 P.2d 613, 617 (Colo. 1982).
Colorado Rule of Civil Procedure 69(g) provides one such procedure. Id. It states:
The court, master, or referee may order any party or other person over whom the court has jurisdiction, to apply any property other than real property, not exempt from execution, whether in the possession of such party or other person, or owed the judgment debtor, towards satisfaction of the judgment.
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Colo. R. Civ. P. 69(g). Colorado courts “interpret[] [Rule 69] liberally to assist
judgment creditors in enforcing final money judgments.” Isis Litig., L.L.C. v. Svensk
Filmindustri, 170 P.3d 742, 746 (Colo. App. 2007) (citing Hudson v. Am. Founders
Life Ins. Co., 417 P.2d 772, 776 (Colo. 1966)).
Wharf
In Wharf, this court affirmed an order entered under Colorado’s turnover rule
against a foreign judgment debtor whose assets were held by third parties abroad.
210 F.3d at 1234, 1236-37. The district court directed the debtor to turn over assets
held in “various foreign bank accounts and stock certificates” to satisfy the judgment.
Id. at 1234. On appeal, we rejected the judgment debtor’s arguments that the
turnover order violated principles of extraterritoriality and international comity.
Id. at 1236.
First, we concluded the turnover order did not conflict with the presumption
against extraterritoriality. As we explained, this presumption “limit[s] the United
States’ ability to hold a party legally accountable for conduct that occurred beyond its
borders.” Id.41 The presumption therefore did not apply because the turnover order
“merely directed a party over whom it had personal jurisdiction to turn over assets.”
Id. We said that“[o]nce personal jurisdiction of a party is obtained, the District Court
41 Courts evaluate the extraterritorial reach of statutes under the canon of statutory interpretation known as the “presumption against extraterritoriality.” RJR Nabisco, Inc. v. Eur. Cmty., 579 U.S. 325, 335 (2016). Although Wharf referred to this as “extraterritoriality principles,” here we refer to it as the “presumption against extraterritoriality.”
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has authority to order it to ‘freeze’ property under its control, whether the property be
within or without the United States.” Id. (quoting United States v. First Nat’l City
Bank, 379 U.S. 378, 384 (1965)).
Second, the turnover order did not raise comity concerns. Id. We explained
that “[i]n general, we will not consider an international comity . . . issue unless there
is a ‘true conflict’ between United States law and the relevant foreign law.”
Id. at 1223 (quoting Hartford Fire Ins. Co. v. California, 509 U.S. 764, 798-99
(1993)). We determined that “[c]ompliance with the turnover order did not require
[the judgment debtor] to violate [foreign] law, nor did it preclude [it] from satisfying
its obligations elsewhere.” Id. at 1236. The district court thus did not err by entering
the turnover order. Id.
D. Analysis
GCC argues (1) it did not possess the assets under Colorado’s turnover rule,
(2) the order calls for impermissible extraterritorial application of United States law,
and (3) the order violates principles of comity. These arguments are unpersuasive.
In Wharf, we upheld a turnover order under almost identical circumstances and
rejected the extraterritoriality and comity arguments that GCC makes here. We thus
affirm the district court.
Application of Colorado Rule 69(g) to Assets Held by Third Parties Abroad
GCC contends the district court misapplied Rule 69(g) because third parties
held its assets abroad, so GCC did not “possess” them. We disagree. GCC possessed
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the assets under Rule 69(g) for the same reason Wharf upheld Rule 69(g)’s
application to property held by third parties abroad.
Under Rule 69(g), a court “may order any party or other person over whom the
court has jurisdiction” to apply property “whether in the possession of such party or
other person . . . towards satisfaction of the judgment.” Colo. R. Civ. P. 69(g).
Because it is undisputed that the district court had jurisdiction over GCC, the only
issue is whether GCC possessed the assets.42
In Wharf, we upheld a turnover order under Rule 69(g) that applied to assets
held in foreign bank accounts and foreign stock certificates. 210 F.3d at 1236. We
said that when the district court had personal jurisdiction over the judgment debtor,
the location of the debtor’s assets was irrelevant. Id. Here, like the assets in Wharf,
GCC’s assets were in a foreign bank account and in foreign stock certificates. The
foreign bank account was in GCC’s in-house bank. See 21-1324, App., Vol. VI
at 1511. Indeed, the connection between GCC and its bank is stronger than the one
between the judgment debtor and the unrelated bank in Wharf. Rule 69(g) thus
applies to the assets at issue.
Contrary to GCC’s suggestion, “possession” under Rule 69(g) does not require
actual possession. See 21-1324, Aplt. Br. at 14. The Colorado Supreme Court has
explained that “[i]t is the principle and policy of [Rule 69(g)] to subject all property
42 It is also undisputed that the third parties holding GCC’s assets were outside the court’s jurisdiction. See 21-1324, Aplt. Br. at 10; 21-1324, Aplee. Br. at 21.
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of the judgment debtor, not specifically exempt, to the payment of his debts.”
Hudson, 417 P.2d at 776. Also, Colorado courts “interpret[] [Rule 69] liberally to
assist judgment creditors in enforcing final money judgments.” Svensk Filmindustri,
170 P.3d at 746. Although Colorado courts have not specifically interpreted
“possession” in Rule 69(g), we conclude based on the foregoing that they would not
limit “possession” to actual possession.43
Dictionaries point to the same conclusion. The Supreme Court of Colorado
“frequently look[s] to the dictionary to ascertain the meaning of undefined words in a
statute.” See People v. Thoro Prods. Co., 70 P.3d 1188, 1194 (Colo. 2003). Black’s
Law Dictionary defines possession as “[t]he fact of having or holding property in
one’s power,” “the right under which one may exercise control over something to the
exclusion of all others,” or “[s]omething that a person owns or controls.” Possession,
Black’s Law Dictionary (11th ed. 2019). Under those definitions, GCC possessed the
assets subject to the Turnover Order because it could exercise control over them.
Practical considerations also support this reading. If Rule 69(g) applied only
to assets over which the judgment debtor had actual possession, then a judgment
debtor’s assets would never be subject to turnover if a third party held them outside
the court’s jurisdiction. Under such a reading, a judgment debtor could avoid
43 The prior version of Colorado’s turnover rule applied to property “in the hands” of the debtor. Hudson, 417 P.2d at 776. The revision from “in the hands” to “possession” suggests that the legislature broadened the rule to reach beyond actual possession.
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enforcement of a judgment by transferring its property to any foreign third party,
including a foreign bank.
Finally, GCC’s reliance on Commonwealth of Northern Mariana Islands v.
Canadian Imperial Bank of Commerce, 990 N.E.2d 114 (N.Y. 2013), is misplaced.
That case concerned an order that required a third-party bank to direct its foreign
subsidiary to turn over the judgment debtor’s assets held abroad. Id. at 64. Here, the
district court ordered GCC to turn over assets held abroad; it did not, as in Mariana
Islands, order a third party to direct a foreign entity to turn over assets. Indeed,
Mariana Islands noted that the order there differed from the order in Miller v.
Doniger, 814 N.Y.S.2d 141 (1st. Dept. 2006), which upheld a turnover order that
required a judgment debtor to turn over assets held in bank accounts outside the
court’s jurisdiction. Id.
The district court did not err in applying Rule 69(g) to GCC’s assets held by
related third parties abroad because the court had jurisdiction over GCC and GCC
had control over and therefore possessed those assets.
Presumption Against Extraterritoriality
The district court correctly applied Wharf’s holding that a turnover order under
Rule 69(g) does not implicate the presumption against extraterritoriality. 210 F.3d
at 1236. GCC’s suggestion that we should overrule Wharf lacks merit.
The presumption against extraterritoriality “reflects the presumption that
United States law governs domestically but does not rule the world.” Kiobel v. Royal
Dutch Petroleum Co., 569 U.S. 108, 115 (2013) (quotations omitted). The Supreme
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Court has explained that the presumption “typically appl[ies]” to “discern whether an
Act of Congress regulating conduct applies abroad.” Id. at 116. Wharf rejected the
judgment debtor’s argument that the turnover order triggered the presumption against
extraterritoriality. 210 F.3d at 1236. We said:
Extraterritoriality principles limit the United States’ ability to hold a party legally accountable for conduct that occurred beyond its borders. Here, the district court merely directed a party over whom it had personal jurisdiction to turn over assets. The location of those assets is irrelevant.
Id.
GCC argues that Supreme Court cases decided after Wharf that address the
presumption against extraterritoriality require us to overrule Wharf. But GCC does
not identify any Supreme Court decision addressing enforcement of a federal court
judgment confirming a foreign arbitral award. Nor do any of the cases that GCC
discusses “contradict[] or invalidate[] our prior analysis” in Wharf. United States v.
Salazar, 987 F.3d 1248, 1254 (10th Cir.), cert. denied, 142 S. Ct. 321 (2021)
(quotations omitted). GCC’s cases dealt with the extraterritorial reach of statutes
regulating conduct, including those that provide a cause of action for certain conduct.
See RJR Nabisco, 579 U.S. at 338 (considering extraterritorial application of RICO’s
provisions prohibiting certain conduct and creating a private right of action);
Morrison v. Nat’l Australia Bank Ltd., 561 U.S. 247, 261-65, 273 (2010) (evaluating
extraterritorial reach of Securities and Exchange Act provision regulating the
purchase or sale of securities). Rule 69(g), by contrast, provides a post-judgment
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enforcement mechanism to assist with collecting a final judgment. It does not even
mention, let alone regulate, the conduct underlying a judgment.
GCC asserts that this case gives rise to the presumption against
extraterritoriality because the Supreme Court in RJR Nabisco “expressly extended the
presumption to statutes affording relief” and Colorado’s turnover rule “affords
relief.” 21-1324, Aplt. Br. at 19. But, as GCC acknowledges, the issue in RJR
Nabisco was whether a statute providing a private right of action applied
extraterritorially. See id. (quoting RJR Nabisco, 579 U.S. at 350). The Court
overruled the Second Circuit’s conclusion that the presumption against
extraterritoriality did not apply to that statute, RJR Nabisco, 579 U.S. at 346, stating
that it applied because “providing a private civil remedy for foreign conduct creates a
potential for international friction.” Id. at 346-47. Colorado’s turnover rule does not
similarly provide a cause of action. Instead, as we said in Wharf, it merely allows a
court to direct a party to turn over certain property to satisfy a judgment. 210 F.3d
at 1236.
GCC also emphasizes Morrison’s statement that courts “must ‘apply the
presumption [against extraterritoriality] in all cases.’” 21-1324, Aplt. Br. at 18
(quoting Morrison, 561 U.S. at 261). But in a more recent decision, the Court
explained that “[w]e typically apply the presumption to discern whether an Act of
Congress regulating conduct applies abroad” and concluded that principles of
extraterritoriality “similarly constrain[ed] courts considering causes of action that
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may be brought under the [Alien Tort Statute.]” Kiobel, 569 U.S. at 116 (emphasis
added).
The district court correctly followed Wharf when it concluded that the
Turnover Order did not implicate the presumption against extraterritoriality. We
discern no basis to overrule Wharf.
Principles of Comity
Finally, GCC argues the district court erred by concluding that the Turnover
Order did not violate principles of comity. We find no such error. The Turnover
Order did not conflict with foreign law and thus did not raise comity concerns.
a. Additional legal background
Comity is “neither a matter of absolute obligation . . . nor of mere courtesy and
good will.” Hilton v. Guyot, 159 U.S. 113, 163-64 (1895). “But it is the recognition
which one nation allows within its territory to the legislative, executive or judicial
acts of another nation, having due regard both to international duty and convenience,
and to the rights of its own citizens, or of other persons who are under the protection
of its laws.” Id. at 164. Comity “counsels voluntary forbearance when a sovereign
which has a legitimate claim to jurisdiction concludes that a second sovereign also
has a legitimate claim to jurisdiction under principles of international law.” Wharf,
210 F.3d at 1236 (quotations omitted).
In Wharf, we said the turnover order did not raise international comity
concerns. Id. “In general, we will not consider an international comity . . . issue
unless there is a ‘true conflict’ between United States law and the relevant foreign
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law.” Id. at 1223 (quoting Hartford Fire , 509 U.S. at 798-99). “A true conflict
exists only when a person subject to regulation by two states cannot comply with the
laws of both.” Id. We explained that “[c]ompliance with the turnover order did not
require [the judgment debtor] to violate [foreign] law” or preclude it from “satisfying
its obligations elsewhere.” Id. at 1236. The turnover order in Wharf was thus
compatible with comity. Id.
b. Analysis
GCC seeks reversal of the Turnover Order on comity grounds because (1) the
Turnover Order conflicted with Mexican law, (2) comity considerations other than a
conflict with foreign law should have been considered, and (3) its assets were
“exempt from execution” under Rule 69(g).44
i. True conflict with Mexican law
GCC argues that the Turnover Order conflicts with the 2014 Mexican
Injunction, the Mexican Stock Exchange Act, and the 2021 Mexican Injunction. But,
as in Wharf, there is no true conflict between the Turnover Order and foreign law.
The district court correctly held that the order did not raise comity concerns.
1) The 2014 Mexican Injunction
The Turnover Order does not conflict with the 2014 Mexican Injunction
because the injunction expired before the Turnover Order was entered.
44 Although GCC does not explain why its exempt-assets theory concerns comity, we nonetheless address this argument.
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In 2014, GCC moved ex parte in Mexico for certain “provisional” measures
pending conclusion of the Bolivian proceedings regarding annulment of the Merits
Award. 21-1324, App., Vol. V at 1191-93. GCC sought to (1) suspend the damages
phase of the arbitration and (2) prevent CIMSA from enforcing any arbitral award.
Id. at 1191-93. The Mexican court “provisionally” granted GCC the requested relief,
calling the 2014 Mexican Injunction an “interim measure.” Id. at 1203. The 2014
Mexican Injunction remained in effect only until annulment proceedings regarding
the Merits Award concluded. Id. GCC acknowledges that Merits Award annulment
proceedings concluded nearly five years before the Turnover Order was entered.
21-1196, Aplt. Br. at 41 (GCC “thought it had already prevailed in obtaining a
judgment setting aside the Merits Award” in January 2017); 21-1324, App., Vol. VII
at 1808-09 (Turnover Order entered in September 2021). The 2014 Mexican
Injunction expired by its terms.
GCC argues, though, that the 2014 Mexican Injunction did not expire because
“the annulment proceedings ended with the Damages Award being annulled.”
21-1324, Aplt. Br. at 33. But the 2014 Mexican Injunction concerned the Merits
Award annulment proceedings, not the Damages Award annulment proceedings. As
the district court noted, GCC had represented that the 2014 Mexican Injunction only
“ordered a stay of the arbitral proceedings until the annulment of the [Merits] Award
had been decided.” 21-1324, App., Vol. VII at 1824 n.12 (quoting GCC’s Resp. to
Mot. to Confirm at 15).
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GCC also asserts that the 2014 Mexican Injunction is viable because the
Mexican court never annulled or revoked it. 21-1324, Aplt. Br. at 33-34. But
because the injunction provided the terms of its expiration, the court did not need to
revoke it. See 21-1324, App., Vol. V at 1203. The 2014 Mexican Injunction said its
measures were “provisionally decreed until a final resolution [was] reached on the
adoption of the interim measures requested, or a final and definitive resolution on the
annulment recourse [was] dictated.” Id. at 1203.
In sum, the 2014 Mexican Injunction expired by its own terms and did not
conflict with the Turnover Order.
2) Mexican Stock Exchange Act
GCC argues the Turnover Order’s requirement that GCC transfer its shares
conflicts with the Mexican Stock Exchange Act, which forbids it to transfer its
“treasury shares.” 21-1324, Aplt. Br. at 34. According to GCC, under that Act,
“treasury shares . . . can only be issued to new shareholders . . . and cannot be
transferred.” Id.
The district court rejected this argument. It concluded there was no conflict
with the Mexican Stock Exchange Act because “the shares at issue [were] not
Treasury Shares but [were] instead freely transferrable shares held in GCC’s
corporate treasury.” 21-1324, App., Vol. VII at 1821. On appeal, GCC repeats its
argument that treasury shares cannot be transferred under the Act, 21-1324, Aplt. Br.
at 34-35, but it does not contest the district court’s determination that the shares were
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freely transferrable because they were not treasury shares. In short, GCC has not
shown that the district court erred.45
GCC has not shown that the district court erred by concluding there was no
conflict between the Turnover Order and the Mexican Stock Exchange Act.
3) 2021 Mexican Injunction
For the first time in its reply brief, GCC asserts that we must accord comity to
the 2021 Mexican Injunction, which prohibits GCC from complying with the
Turnover Order. We disagree.
As an initial matter, because GCC failed to raise this argument in its opening
brief, it is waived. “We have held that a failure to raise an issue in an opening brief
waives that issue, and that we will not entertain issues raised for the first time on
appeal in an appellant’s reply brief.” Platt v. Winnebago Indus., Inc., 960 F.3d 1264,
1271 (10th Cir. 2020) (quotations omitted). Relatedly, the district court could not
have abused its discretion by failing to accord comity to the 2021 Mexican Injunction
because the injunction did not exist when it entered the Turnover Order.
45 Further undermining GCC’s argument is its acknowledgement that it could transfer treasury shares if a Mexican court ordered it to do so. 21-1324, Aplt. Br. at 34. As the district court said, GCC has “present[ed] no logical reason why a corporation would be permitted to place its repurchased shares on the stock exchange for purchase by a third-party and why a Mexican court would be permitted to order a transfer of those shares to a third-party, but the corporation would be prohibited from transferring the same shares to the same third-party in satisfaction of a foreign judgment.” 21-1324, App., Vol. VII at 1821.
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Even if we reach this issue because the 2021 Mexican Injunction issued just
days after GCC filed its opening brief, its argument fails. Courts do not accord
comity when a party deliberately seeks to block collection of a confirmed U.S.
judgment. In Motorola v. Uzan, 388 F.3d 39 (2d Cir. 2004), the Second Circuit
rejected the appellants’ argument that the district court should accord comity to
foreign orders that barred them from transferring assets listed in a turnover order.
Id. at 60. It explained that foreign orders “are not entitled to comity if the litigants
who procure them have deliberately courted legal impediments to the enforcement of
a federal court’s orders.” Id. (quotations omitted). Comity to the foreign orders was
unwarranted because securing them was “an overt attempt to interfere with [the
district court’s] jurisdiction.” Id. at 60-61 (quotations omitted). The Fourth Circuit
also concluded that a foreign order was not entitled to comity when the defendant
“used the [foreign] courts to impede U.S. collection efforts” on a “largely unsatisfied
U.S. judgment.” SAS Inst., Inc. v. World Programming Ltd., 952 F.3d 513, 525
(4th Cir. 2020), cert. denied, 141 S. Ct. 1053 (2021) (explaining that comity is not
advanced “when one country enjoins legitimate collection efforts in another
country”).
Comity is not warranted here. GCC sought an injunction in Mexico to avoid
its obligations under the Turnover Order. It now argues that “it would strike at the
heart of comity” to require GCC to take actions “that are expressly prohibited by a
Mexican court.” 21-1324, Aplt. Reply Br. at 4. But “[c]omity is not advanced when
a foreign country condones an action brought solely to interfere with a final U.S.
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judgment.” SAS, 952 F.3d at 525. By ordering GCC not to comply with the
Turnover Order, the Mexican court accorded no comity to the Turnover Order.
GCC’s arguments thus “come burdened with the failure of [Mexican courts] to
recognize comity.” Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d
909, 939 (D.C. Cir. 1984). The 2021 Mexican Injunction is not entitled to comity.
ii. The district court’s failure to weigh other factors
GCC also argues that the district court erred by failing to consider comity
factors beyond whether a true conflict exists. See 21-1324, Aplt. Br. at 26-29. We
disagree. Under Wharf, once the district court determined there was no true conflict,
it correctly held that the Turnover Order did not implicate international comity
concerns.
In Wharf, we said, “In general, we will not consider an international
comity . . . issue unless there is a ‘true conflict’ between United States law and the
relevant foreign law.” 210 F.3d at 1223. We refused to overrule the turnover order
on comity grounds because “[c]ompliance with the turnover order did not require [the
judgment debtor] to violate [foreign] law, nor did it preclude [the judgment debtor]
from satisfying its obligations elsewhere.” Id. at 1236. Wharf thus provides that
comity considerations arise only if there is a true conflict between the turnover order
and foreign law. As applied to our case, after finding no true conflict, the district
court correctly concluded that the “turnover order under the circumstances presented
here does not threaten the comity of nations.” 21-1324, App., Vol. VII at 1825.
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GCC’s argument to the contrary is not persuasive. It asserts that “the Ninth
Circuit has held ‘the district court erred when it required the existence of a true
conflict when it analyzed the application of international comity.’” 21-1324, Aplt.
Br. at 27 (quoting Mujica v. AirScan Inc., 771 F.3d 580, 602 (9th Cir. 2014)). Mujica
said a true conflict was only one factor for a court to consider when evaluating
whether to “decline to exercise jurisdiction in a case properly adjudicated in a foreign
state.” 771 F.3d at 599, 602. But Wharf, not Ninth Circuit precedent, governs here.
Wharf held that without a conflict between the turnover order and foreign law,
comity does not apply. 210 F.3d at 1223, 1236. Thus, the district court was not
required to evaluate the “other considerations” that GCC now contends it should have
considered. 21-1324, Aplt. Br. at 28-29.
Further, Mujica is distinguishable because it involved claims for damages
brought by Colombian plaintiffs based on a bombing in Colombia against U.S.
companies. 771 F.3d at 584-85. The Ninth Circuit addressed whether the district
court should have abstained from evaluating the state-law claims while Colombian
criminal and civil proceedings were ongoing. See id. at 585-87, 596-97. Here, by
contrast, the parties had already adjudicated their dispute through arbitration. The
Turnover Order enforces collection on the resulting award.
iii. Assets not exempt from execution
Finally, GCC seeks reversal because the Turnover Order targets property that
is “exempt from execution” under Rule 69(g). Rule 69(g) allows a court to order
turnover of property “not exempt from execution.” Colo. R. Civ. P. 69(g).
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The district court rejected this argument. 21-1324, App., Vol. VII at 1816. It
determined that
Mexican law applied to determine whether the assets were exempt under Rule 69(g), id. at 1814;46
Article 434 of the Mexican Federal Code of Civil Procedure, “which enumerates specific assets exempt from attachment,” was the relevant law, id. at 1815 (quotations omitted), and Article 434 covered both attachment and execution, id. at 1815-16; and
Article 434 did not list any of the assets at issue, and they were thus not “exempt from execution” under Rule 69(g), id. at 1816.
The court explained that Article 434 exempted the following categories of assets
from execution:
1.- assets expressly incorporated into the so-called Family Assets, 2.- personal items, 3.- artisan’s working instruments, 4.- agricultural equipment, 5.- books and records of individuals rendering personal services , 6.- military equipment, 7.- instruments and equipment essential to the operation of a commercial or industrial facility, 8.- grains, 9.- usufruct itself but not the products derived therefrom, 10.-certain real property rights . . ., 11.- wages of public servants, 12.- life rent, 13.- ownership as member of a rural area under community ownership.
Id. (quoting Dist. Ct. Doc. 139-1 at 7). This list does not include any of the assets at
issue here.
On appeal, GCC repeats arguments that the district court rejected:
(1) Article 434 is inapplicable because it lists assets that are exempt from attachment,
46 Before the district court, the parties disputed whether Colorado or Mexican law applied to determine whether the assets were exempt from execution. 21-1324, App., Vol. VII at 1814. On appeal, neither party challenges the district court’s choice-of-law analysis.
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not execution; and (2) assets can be exempt from execution based on Mexican public
policy or court orders. See 21-1324, Aplt. Br. at 36-37. We find neither argument
persuasive.
First, GCC provides no basis to reject the district court’s conclusion that
Article 434 pertains to assets that are exempt from execution. Relying on its expert,
GCC asserts that Article 434 lists assets “exempt from ‘attachment’ not ‘execution.’”
21-1324, Aplt. Br. at 36. GCC’s expert said that “[a]ttachment . . . is a form of pre or
post judgment relief that prevents an asset from being sold until a judgment is issued
or the debtor pays a debt.” Id. (quoting 21-1324, App., Vol. V at 1278.) But that
statement does not show that Article 434 applies to attachment and not execution.
Neither GCC nor its expert cites any authority indicating that Mexican law
distinguishes between attachment and execution.47 GCC has thus not shown the
district court erred by concluding that Article 434 addresses assets exempt from
execution.
Second, GCC provides no ground for concluding that Mexican public policy or
court orders exempt the assets from execution. It asserts that “sub-section XV of
Article 434 says that ‘any other assets exempted by law’ are exempt from
attachment.” Id. at 36. But GCC cites nothing to support its argument that this
47 CIMSA cites a secondary source stating that under Mexican law, “enforcement is done through attachment,” suggesting there is no distinction between attachment and execution. 21-1324, Aplee. Br. at 25 (quoting Ovalle Favela, José, Derecho Procesal Civil 293-295 (Oxford University Press) (2012)).
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provision means that assets can be exempt from execution on public policy grounds.
Without more, we cannot conclude the district court erred.
The Turnover Order does not raise comity concerns.
E. Conclusion
The district court did not err by entering the Turnover Order. We affirm the
district court.
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21-1196; 21-1324, Compañía de Inversiones Mercantiles S.A. v. Grupo Cementos de Chihuahua S.A.B. de C.V. ROSSMAN, J., dissenting My colleagues in the majority affirm the district court’s decision under
Federal Rule of Civil Procedure 60(b)(5). I would reverse.1
Before us is a “quintessentially foreign dispute.” Getma Int’l v. Republic
of Guinea, 862 F.3d 45, 47 (D.C. Cir. 2017). Both parties are foreign corporate
entities—one Bolivian (“CIMSA”) and two Mexican (collectively, “GCC”)—
involved in a purely private commercial controversy. They arbitrated under
Bolivian law, according to the New York Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (“New York Convention” or
“Convention”), June 10, 1958, 21 U.S.T. 2517. Bolivia has been the site of their
substantive litigation over the merits of the Bolivian arbitration decision (the
“Merits Award”) and the damages awarded by the arbitral tribunal (the
“Damages Award”).
In August 2020, after several years of parallel proceedings where GCC
sought to invalidate the Awards in Bolivia while CIMSA sought to enforce
them in the United States, this court affirmed the Awards in Compañía de
Inversiones Mercantiles, S.A. v. Grupo Cementos de Chihuahua S.A.B. de C.V.,
970 F.3d 1269 (10th Cir. 2020) (“CIMSA I”). The panel in CIMSA I
1 Because I would reverse in Case No. 21-1196, I do not reach the turnover order in Case No. 21-1324.
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acknowledged, however, the Damages Award remained subject to
then-ongoing litigation in Bolivia. Id. at 1275.2
The Bolivian litigation over the Damages Award ended three weeks after
the mandate issued in CIMSA I. In October 2020, the Plurinational
Constitutional Tribunal (the “PCT” or “Tribunal”)—the highest court in
Bolivia, similar to the United States Supreme Court—ruled for GCC,
concluding the Damages Award must be set aside under Bolivian law (the
“2020 PCT Order”). The 2020 PCT Order also conclusively resolved a conflict
between apparently competing 2016 rulings in Bolivian courts.
The inconsistencies between the November 2016 PCT Order and the
December 2016 PCT Order were a product of simultaneous remand
proceedings originating in different chambers of the PCT—a unique feature of
Bolivia’s highest court. The 2020 PCT Order declared the December 2016 PCT
Order a juridical nullity and essentially reinstated the earlier 2016 decision—
2 The majority suggests GCC acted inequitably by failing to notify the CIMSA I panel of its queja por incumplimiento filing. Maj. Op. at 62 n.38; see also id. at 32 n.13. I disagree. The salient—and undisputed—point is this court (like the district court) knew of ongoing litigation over the Damages Award in Bolivia when it rendered its decision. See CIMSA I, 970 F.3d at 1275 (acknowledging “[t]he parties continue to litigate the [D]amages [A]ward in Bolivia”). That GCC did not further specify those ongoing Bolivian proceedings involved a queja is of no moment, particularly given the observation by the CIMSA I panel it was unable to “render[] consistent[] and logical all of the twists, turns, and orders in the Bolivian proceedings, at least by standards recognizable to American jurists and litigants.” Id. at 1297.
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this resulted in the annulment of the Damages Award. There is no serious
question the 2020 PCT Order is the last word on the Damages Award: the
Bolivian courts have followed its mandate to order a new damages arbitration,
Mexican courts have observed it,3 and CIMSA has no pending challenges to
reinstate the Damages Award in Bolivia.4
About a year before the 2020 PCT Order entered, and while the parties
were litigating the Damages Award in Bolivia, the District of Colorado granted
CIMSA’s request to enforce the Awards, based on the December 2016 PCT
Order (the “Confirmation Judgment”). CIMSA I, 970 F.3d at 1276. But when
the 2020 PCT Order issued, GCC returned to federal court in Colorado and
sought Rule 60(b)(5) relief from the Confirmation Judgment. GCC’s argument
was simple: the Confirmation Judgment was based on the Damages Award,
and the Damages Award no longer existed under Bolivian law. Invoking the
New York Convention, GCC argued the Confirmation Judgment should be
vacated under Article V(1)(e), because “[t]he award has . . . been set aside or
suspended by a competent authority of the country in which, or under the law
of which, that award was made.” Among other authorities, GCC relied on Thai-
3GCC had challenged the arbitral awards in Mexico, too. CIMSA I, 970 F.3d at 1275.
4The Merits Award stands in favor of CIMSA. As the district court correctly observed, “[t]he nullification proceedings in the context of the Merits Award did not end favorably for GCC.” R. vol. V at 1213.
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Lao Lignite (Thailand) Co. v. Government of Lao People’s Democratic Republic,
864 F.3d 172 (2d Cir. 2017), the only other U.S. case considering Rule 60(b)(5)
within the Convention, where the Second Circuit had affirmed vacatur in
similar circumstances.
Though the Confirmation Judgment rested on a now-annulled Damages
Award, CIMSA opposed Rule 60(b)(5) relief. “[T]here is no obligation on the
part of the court to extend comity to a foreign judgment,” CIMSA claimed. R.
vol. IV at 890. CIMSA urged the court to disregard the 2020 PCT Order on
public policy grounds, contending the order was “repugnant to fundamental
notions of what is decent and just” in the United States—a standard drawn
from the Restatement (Second) of Conflict of Laws § 117, cmt. c (1971), and
cases interpreting Article V(2)(b)’s “public policy” exception to enforcement of
a foreign arbitral award. TermoRio S.A. E.S.P. v. Electranta S.P., 487 F.3d 928,
938 (D.C. Cir. 2007) (quoting Ackermann v. Levine, 788 F.2d 830, 841 (2d Cir.
1986)). CIMSA’s repugnancy argument hinged on its assertion that the 2020
PCT Order annulling the Damages Award was the product of political bias and
corruption in Bolivia.
In reply, GCC clarified comity was actually at its zenith because the Rule
60(b)(5) proceeding involved a foreign judgment annulling an arbitral award
governed by treaty. GCC explained the New York Convention unquestionably
requires contracting states to give great deference to the authority of the
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primary jurisdiction (the arbitral seat) and permits a court in the secondary
jurisdiction to reject the arbitral seat’s judgment only in very narrow
circumstances—if the foreign judgment is so-called “repugnant.” But, as GCC
emphasized, the repugnancy standard “is high” and “infrequently met,” and
applies “[o]nly in clear-cut cases.” TermoRio, 487 F.3d at 938 (alteration in
original) (citation omitted). CIMSA did not prove the Bolivian orders were
repugnant, GCC maintained, and took issue with the Bolivian court system
only when it stopped ruling in its favor. GCC also contended the district court
could not second guess the decisions of Bolivia’s highest court.
The district court denied GCC’s Rule 60(b)(5) motion. R. vol. V at
1198-1220. The district court assumed the 2020 PCT Order was valid and had
nullified the Damages Award under Bolivian law. The district court also
rejected CIMSA’s public policy argument, holding, “I do not consider the 2020
[Bolivian] orders themselves to be ‘repugnant to fundamental notions of what
is decent and just’ in the United States . . . .” Id. at 1215. Still, the district court
refused to extend comity to the foreign arbitral seat because “application of
those orders through vacatur of this Court’s prior [Confirmation] Judgment
would rise to that unacceptable level.” Id. In other words, the district court
determined that extending comity to the 2020 PCT Order would require
undoing its own Confirmation Judgment, and this vacatur would offend United
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States public policy which, the court reasoned, “dictates that there be an end
of litigation.” Id. at 1217 (citation omitted).
To be sure, “[p]roperly applied Rule 60(b) strikes a balance between
serving the ends of justice and preserving the finality of judgments.” Nemaizer
v. Baker, 793 F.2d 58, 61 (2d Cir. 1986) (emphasis added). But I cannot say
with confidence, as the majority does, that the district court properly applied
Rule 60(b)(5) here, where its discretionary determination was based on a
legally erroneous interpretation and application of the New York Convention.
El Encanto, Inc. v. Hatch Chile Co., 825 F.3d 1161, 1162 (10th Cir. 2016)
(holding “a district court always abuses its discretion when it errs on a legal
question”); see also CIMSA I, 970 F.3d at 1296 (noting we review de novo “a
district court’s legal interpretations of the New York Convention”) (citation
omitted).
The district court’s decision to deny Rule 60(b)(5) relief was guided by
two fundamental errors of law, which, regrettably, the majority now endorses.
First, the district court mistakenly declined to extend comity to the 2020
PCT Order after concluding the order was not “repugnant,” as CIMSA had
argued. This error alone compels reversal. Every other court to consider the
issue has held—based on well-established comity principles and the language
of the New York Convention—that a foreign judgment setting aside a foreign
arbitral award should be respected unless the judgment itself is “repugnant to
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fundamental notions of what is decent and just.” TermoRio, 487 F.3d at 938
(citation omitted).
Second, the district court mistakenly determined a general finality
interest in the secondary jurisdiction could satisfy the repugnancy standard
under the New York Convention and thus overcome any deference owed to the
arbitral seat. No other court has so held, and for good reason. “[P]rotecting the
finality of judgments of our courts” is a “weighty interest[]” under Rule 60(b)(5),
Thai-Lao, 864 F.3d at 182, but finality, without more, is not enough to meet
the high bar of the “repugnancy” standard. The presumption of comity in the
Convention context cannot be trumped merely by worry over proceedings
without end where, as here, the non-repugnant judgment of the arbitral seat
demands deference in the secondary jurisdiction.
I fear the majority opinion reprises the mistakes it affirms. The majority
opinion frequently emphasizes the district court’s vast discretion under Rule
60(b)(5) and leans heavily on deferential appellate review. But discretion and
deference cannot insulate legal errors, as the majority itself observes. Maj. Op.
at 19 (“A district court abuses its discretion . . . when it . . . ‘fails to consider
the applicable legal standard.’” (citation omitted)); see El Encanto, 825 F.3d at
1162 (“[W]e decide the presence or absence of legal error de novo. So really in
cases like this, where everything turns on the interpretation of rules,
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regulations, and statutes, it’s a bit anomalous to ask whether the district court
abused its discretion.”).
The majority also sets out a new legal rule under the New York
Convention, concluding a court in the secondary jurisdiction may decline
comity to a primary jurisdiction’s annulment order if the order itself is
repugnant or if its enforcement would offend public policy. And by endorsing
the district court’s generalized concerns over finality as a legitimate basis for
invoking the Convention’s narrow public policy exception, the majority
mistakenly suggests the presumption of comity yields readily to an easily
satisfied “repugnancy” standard. The majority opinion also creates a circuit
split and moves this court out of line globally with signatory countries.
We should reverse the district court’s order denying Rule 60(b)(5) relief
and remand with instructions to vacate the judgment. Because my colleagues
in the majority conclude otherwise, I respectfully dissent.
****
This dissent proceeds as follows. Part I addresses Rule 60(b)(5) as a
procedural tool operating within the Convention. Part II considers and rejects
the majority’s conclusion that the district court exercised its Rule 60(b)(5)
discretion in a manner “consistent” with the Convention. Maj. Op. at 37. Part
III explains why refusing to enforce the 2020 PCT Order after concluding the
Order itself was not “repugnant to fundamental notions of what is decent and
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just” was legal error. Part IV discusses why vindicating finality, though a
relevant interest under Rule 60(b)(5), is not alone a public policy sufficient to
overcome the presumptive extension of comity contemplated under the New
York Convention. Part V concludes with some practical considerations about
the implications of today’s decision.
I
The majority opinion explains Rule 60(b)(5) provides an “extraordinary
remedy” requiring “extraordinary circumstances.” Maj. Op. at 22 (citing
Jackson v. Los Lunas Cmty. Program, 880 F.3d 1176, 1191-92 (10th Cir.
2018)).5 It also underscores the vastness of a district court’s discretion under
Rule 60(b)(5)—“a grand reservoir of equitable power.” Maj. Op. at 22 (quoting
Manzanares v. City of Albuquerque, 628 F.3d 1237, 1241 (10th Cir. 2010)). I
agree Rule 60(b)(5) relief will be the exception not the rule. But where Rule
60(b)(5) is invoked as a procedural tool under the New York Convention, the
hurdle for claimants is not as high, nor the district court’s discretion quite as
limitless, as the majority posits.
Though we are reviewing the decision to deny Rule 60(b)(5) relief, this is
ultimately a New York Convention case. The Convention provides contracting
5Notably, Jackson draws this “extraordinary” language from cases where the reviewing court was concerned with litigants using Rule 60(b) as an impermissible substitute for direct appeal—a circumstance not presented here. See, e.g., Servants of Paraclete v. Does, 204 F.3d 1005, 1009 (10th Cir. 2000).
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nations—including the United States and 169 other countries—will recognize
and enforce arbitral awards “in accordance with the rules of procedure of the
territory where the award is relied upon, under the conditions laid down” in
other provisions. New York Convention art. III. As the district court correctly
concluded, Rule 60(b)(5) is one such rule of procedure. R. vol. V at 1212 n.6;
Thai-Lao, 864 F.3d at 185 (“Rule 60(b)(5) applies to motions to vacate
judgments confirming arbitral awards that are subsequently set aside in the
primary jurisdiction.”).
Our cases counsel Rule 60(b) “should be liberally construed when
substantial justice will thus be served.” Thompson v. Kerr-McGee Refin. Corp.,
660 F.2d 1380, 1385 (10th Cir. 1981). The Rule is a procedural
acknowledgement that things change, that facts come to light, that decisions
rendered may be unrendered; it is itself an exception to finality. See Frew ex
rel. Frew v. Hawkins, 540 U.S. 431, 441 (2004) (“The Rule encompasses the
traditional power of a court of equity to modify its decree in light of changed
circumstances.”).
When there has been a “significant change either in factual conditions or
in law,” Rule 60(b)(5) “provides a means by which a party can ask a court to
modify or vacate a judgment.” Horne v. Flores, 557 U.S. 433, 447 (2009)
(quoting Rufo v. Inmates of Suffolk Cnty. Jail, 502 U.S. 367, 384 (1992)). When
a “significant change” is shown, a court abuses its discretion by refusing to
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modify or vacate the earlier judgment. Id. (citing Agostini v. Felton, 521 U.S.
203, 215 (1997)). By the Rule’s text, significant change includes the reversal or
vacatur of an earlier judgment. Fed. R. Civ. P. 60(b)(5) (providing “[o]n motion
and just terms, the court may relieve a party . . . from a final judgment” when
“it is based on an earlier judgment that has been reversed or vacated”).
GCC’s motion came within the clear purview of Rule 60(b)(5). Recall,
GCC invoked Rule 60(b)(5) because, under Article V(1)(e) of the Convention,
the Damages Award had been “set aside or suspended by a competent
authority of” Bolivia, “the country in which, [and] under the law of which, that
award was made.” Here, the Confirmation Judgment was “based on” the
December 2016 PCT Order, since nullified by the 2020 PCT Order.
The majority insists, however, “a court is not required to set aside a
judgment ‘simply because it was based on a prior judgment that has later been
reversed.’” Maj. Op. at 22 (quoting Manzanares, 628 F.3d at 1241). That
general principle helps little under the circumstances. What matters here is
not just that the district court has discretion under Rule 60(b)(5), as the
majority highlights, but whether its exercise of that discretion comports with
the New York Convention. Manzanares, a purely domestic civil-rights action,
is not about applying Rule 60(b)(5) to a foreign judgment overturning an
arbitral award under the New York Convention. Here, the treaty makes all the
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difference because it informs and guides a district court’s discretion under Rule
60(b)(5).
The Second Circuit in Thai-Lao has articulated the general rule: a Rule
60(b)(5) motion should be granted where a foreign arbitral award has been set
aside. While the majority touches on the Second Circuit’s understanding, Maj.
Op. at 25-26, its recitation remains incomplete. The majority does not
acknowledge “[t]he annulment of an arbitral award in the primary jurisdiction
should . . . be given significant weight” under Rule 60(b)(5). Thai-Lao, 864 F.3d
at 186 (emphasis added). Nor does the majority discuss, as the Second Circuit
did, that when Rule 60(b)(5) is invoked as a procedural tool under Article III,
“district courts should consider the point that ‘under the Convention, the power
and authority of the local courts of the [primary jurisdiction] remain of
paramount importance.’” Id. (alteration in original) (quoting Yusuf Ahmed
Alghanim & Sons v. Toys “R” Us, Inc., 126 F.3d 15, 22 (2d Cir. 1997)). Though
the district court thoughtfully recognized it was proceeding under the
Convention, its Rule 60(b)(5) analysis did not give “significant weight” to the
Bolivian annulment order or otherwise acknowledge the “paramount
importance” of the primary jurisdiction.
Finally, the movant invoking Rule 60(b)(5) under the New York
Convention does not face the high barrier suggested by the majority. As the
Second Circuit recognized, there is not an “onerous burden for the beneficiaries
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of the annulment” seeking relief under Rule 60(b)(5). Thai-Lao, 864 F.3d at
187. Indeed, “[c]ourts considering Rule 60(b)(5) motions are generally, and
correctly, solicitous of a movant seeking relief when a prior judgment on which
the challenged judgment relies has been vacated.” Id. at 186 (citations
omitted). This solicitude makes sense because the Convention provides a
strong presumption in favor of the primary jurisdiction’s ruling (here, Bolivia)
but tightly circumscribes the discretion of secondary jurisdictions (any other
signatory in which enforcement is sought, including the United States).
The majority does not decide the burden allocation issue, noting “[w]e
need not resolve which party bears the burden on the public policy versus
comity question because we can decide this appeal irrespective of which party
may bear that burden.” Maj. Op. at 31 n.12. There seems no reason we should
not follow the framework as articulated by the Second Circuit in Thai-Lao.
Rule 60(b)(5) places on movants the burden of showing entitlement to relief—
vacatur, in our case.6 When the vacatur request is based on Article V(1)(e), as
6 Citing Thai-Lao, 864 F.3d at 182, the majority says the moving party, when seeking relief under Rule 60(b)(5), “must provide ‘highly convincing’ evidence that it is entitled to this extraordinary remedy and that its conduct as a matter of equity should allow vacatur.” Maj. Op. at 31. The majority does not elaborate on what “highly convincing evidence” means, but the case on which Thai-Lao relied speaks of “documentary evidence” to support vacatur. Kotlicky v. U.S. Fid. & Guar. Co., 817 F.2d 6, 9 (2d Cir. 1987). GCC certainly produced sufficient documentary evidence to show the Damages Award had been set aside.
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here, the movant must show the challenged judgment relies on a prior
judgment that has been annulled. Thai-Lao, 864 F.3d at 182, 187. The burden
then shifts to the party opposing Rule 60(b)(5) relief to show the annulment
order does not deserve comity because it is repugnant to United States public
policy. Id. at 186. “In the absence of such a public policy concern, however, the
annulment of an award in the primary jurisdiction should weigh heavily in a
district court’s Rule 60(b)(5) analysis.” Id.7
Here, GCC carried its burden under Rule 60(b)(5). For purposes of
Article V(1)(e), GCC showed the 2020 PCT Order was valid and had annulled
the legal basis for the Confirmation Judgment. CIMSA then asserted a public
policy defense, claiming repugnancy of the 2020 PCT Order based on alleged
irregularities in the Bolivian political and judicial systems. The district court
rejected CIMSA’s public policy argument. Under these circumstances, identical
to those where Thai-Lao upheld Rule 60(b)(5) vacatur,8 the district court
7This was also the burden allocation framework understood by the parties and applied by the district court in the Rule 60(b)(5) proceedings. See R. vol. III at 665-67; vol. V at 1215; see also vol. IV at 890-905.
8 The majority contends Thai-Lao “differ[s] in two significant respects” and thus does not compel vacatur here. Maj. Op. at 31. I respectfully disagree.
First, the majority observes here, the district court denied the Rule 60(b)(5) motion, but there, the district court had granted it. Maj. Op. at 31-32. The majority appears to suggest that, where abuse of discretion review is applied, reversal necessarily requires more than affirmance. But the veil of
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mistakenly refused to extend deference to the primary jurisdiction’s
application of its own law to set aside an arbitration award issued in its
country. Instead, the district court elevated its own conception of United States
public policy and procedural values over a treaty that demands international
comity and speaks in terms of mutual obligation. The district court effectively
read the Convention out of its Rule 60(b)(5) analysis, and the majority opinion
endorses that mistake.
II
I now turn to the majority’s conclusion that the district court exercised
its Rule 60(b)(5) discretion in a manner “consistent” with the Convention. See
Maj. Op. at 37. As I will explain, the district court’s decision to deny Rule
deference is pierced when the district court errs on the law, so the standard of review does no meaningful work for the majority.
Second, the majority emphasizes here, GCC initiated new proceedings in Bolivia after the district court’s Confirmation Judgment, but there, Laos had sought annulment before the confirmation judgment. This difference, the majority claims, “implicates the United States’ interest in the finality of the arbitral award and the Confirmation Judgment.” Maj. Op. at 32. The majority’s rule—where “proceedings-after-Confirmation” necessarily trigger U.S. finality interests—sets an arbitrary post. But Thai-Lao explains finality does not “stand in the way” of vacatur where “the party seeking to enforce the Award [here, CIMSA] knew proceedings to set aside the Award in the primary jurisdiction were ongoing before the District Court entered judgment, and the party seeking vacatur [here, GCC] sought relief promptly after courts in the primary jurisdiction annulled the award.” 864 F.3d at 189. In our case, everyone knew set-aside proceedings were pending in Bolivia and, when they concluded, GCC filed its Rule 60(b)(5) motion within fifteen days.
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60(b)(5) relief runs counter to the text of the Convention, the intent of its
drafters, and the nearly universal practice of all its signatories providing for
deference to the lawful decisions of the primary jurisdiction. Only in
exceptional circumstances, absent here, should an annulment by courts of the
primary jurisdiction not carry effect in every secondary jurisdiction.
A
Our analysis must begin with the Convention’s text, Medellín v. Texas,
552 U.S. 491, 506 (2008), but may also include an examination of the
negotiating and drafting history to determine the shared understanding of that
text. See id. at 507 (“Because a treaty ratified by the United States is ‘an
agreement among sovereign powers,’ we have also considered as ‘aids to its
interpretation’ the negotiation and drafting history of the treaty . . . .”) (citation
The Convention provides, “Each Contracting State shall recognize
arbitral awards as binding and enforce them in accordance with the rules of
procedure of the territory where the award is relied upon, under the conditions
laid down in the following articles.” New York Convention, art. III. Recall, one
of those “conditions” is that “[r]ecognition and enforcement of the award may
be refused, at the request of the party against whom it is invoked,” art. V(1), if
that party shows that “[t]he award has . . . been set aside or suspended by a
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competent authority of the country in which, or under the law of which, that
award was made,” art. V(1)(e).
The Convention is thus clear the arbitral seat alone has the authority
and the jurisdiction to vacate an award. See Albert Jan van den Berg,
Annulment of Awards in International Arbitration, in International
Arbitration in the 21st Century: Towards “Judicialization” and Uniformity?
134 (Richard B. Lillich & Charles N. Brower eds. 1994); cf. Int’l Standard Elec.
Corp. v. Bridas Sociedad Anónima Petrolera, 745 F. Supp. 172, 177 (S.D.N.Y.
1990) (finding Article V(1)(e) “undoubtedly referenced” the arbitral seat). The
text of the Convention places no restrictions on the ability of the arbitral seat
to review awards but does circumscribe the review performed in secondary
seats. New York Convention art. V. It rejects “a-national” or
“internationalized” arbitral awards and preserves the centrality of the primary
jurisdiction in making or unmaking arbitration awards. See Yusuf, 126 F.3d at
23 (“The Convention specifically contemplates that the state in which, or under
the law of which, the award is made, will be free to set aside or modify an award
in accordance with its domestic arbitral law and its full panoply of express and
implied grounds for relief.”).
A necessary corollary of this observation is the primary state “may set
aside an award on grounds that are not consistent with the laws and policies
of a secondary Contracting State.” TermoRio, 487 F.3d at 937. The majority’s
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endorsement of signatories free to disregard an arbitral seat’s annulment of an
award frustrates this harmonious reading of the Convention and diminishes
the Convention to a regime “in which the supposed independence of the State
is reduced to subjecting its conduct to whatever others follow.” I Antonio
Sánchez de Bustamente y Sirven, Tratado de Derecho Internacional Privado
456 (1896) [translated]. One wonders why the setting aside of an award in the
primary jurisdiction would ever matter if parties can just proceed to every one
of the other 169 signatories to enforce the award.
In practice, a view has prevailed globally that annulled awards carry no
legal force. Professor Pieter Sanders, the text’s drafter and the “Father of the
Convention,” understood the enforcement of an annulled award to be a legal
impossibility and a potential violation of the public policy of any country
willing to conclude otherwise. Pieter Sanders, New York Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, 6 Neth. Int’l L. Rev.
43, 55 (1959); cf. Gary B. Born, International Commercial Arbitration 3389 (2d
ed. 2014) (comparing annulment to an appellate court’s vacatur of a trial court
judgment).
Conscious of our modest role as one of many jurisdictions worldwide
interpreting a shared text, we ought to examine, too, the decisions of our sister
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signatories. This review allows us to better discern the Convention’s meaning.9
The majority pays these decisions little mind.
Most foreign courts generally refuse to recognize and enforce arbitration
awards set aside at the primary jurisdiction. Brazil has a categorical bar on
recognition of set-aside awards.10 German courts have similarly held that
enforcement of annulled awards “must” be denied and that null awards no
longer exist to be enforced.11 Swiss and Dutch courts will defer to the seat of
arbitration absent a finding that exceptional reasons—e.g., significant due
9Considering the decisions of our sister signatories where a treaty is concerned also helps us become more clearly aware of our legal system’s practices and biases, which will not always be shared by the other signatories, and some of which may implicitly lead us to favor the categorical righteousness of our own determinations.
10 S.T.J.J. [Superior Tribunal de Justiça], Sentença Estrangeira Contestada No. 2011/0129084-7, Relator: Min. Jorge Mussi, 16.12.2015, (Braz.) available at STJ - Jurisprudência do STJ (finding an award annulled in Argentina to be null in Brazil); cf. Corte Suprema de Justicia [C.S.J.] [Supreme Court], 8 september 2011, EDF Internacional S.A. c. Endesa Latinoamericana S.A. et al., no. 4390-2010) (Chile), available at Base Jurisprudencial del Poder Judicial (pjud.cl) (refusing to enforce judgment in Chile that was set aside in Argentina). 11 See, e.g., Bundesgerichtshof [BGH] [Federal Court of Justice] Feb. 22, 2001, 23 Neue Juristische Wochenschrift [NJW] 1730, 1730-31 (“If the arbitral award is not yet binding in the issuing State or if it has been set aside, it must be refused recognition in the executing State.”) [translated]; Oberlandesgericht [OLG] München [Higher Regional Court] Jul. 30, 2012, 6 Zeitschrift für Schiedsverfahren [SchiedsVZ] 339, 341 (“If a foreign arbitral award is set aside in the country of origin, it can no longer have any effect in Germany[.]”) [translated].
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process violations—counsel otherwise.12 Israel follows the same approach.13
And in England and Wales, one seeking to enforce a set-aside award must bear
“a heavy burden to establish not only that a foreign court’s decisions were
wrong or manifestly wrong[,] but that they are so perverse as for it to be
concluded that they could not have been arrived at in good faith or otherwise
than by bias.”14 Only one signatory jurisdiction, France, consistently permits
enforcement of annulled awards, but it does so based on domestic law treating
12 Tribunal fédérale [TF] [Federal Supreme Court] Dec. 8, 2003, 4P.173/2003/ech (Switz.) (“Pursuant to [Article V(1)(e)], enforcement of an arbitral award must be refused if the party objecting to enforcement provides proof that the award . . . [has been] set aside or suspended by a competent authority in the country in which, or pursuant to which law, it was rendered.”) (emphasis added) [translated]; Hoge Raad der Nederlanden [HR] [Supreme Court of the Netherlands] 24 november 2017, NJ 2019/223 m.nt. H.J. Snijders ([Applicant]/OJSC Novolipetsky Metallurgichesky Kombinat) (Neth.) (placing on party requesting enforcement of annulled award burden of showing “special circumstances” to disregard Article V(1)(e)) [translated].
13LCivA 44/21 B.I. Science (2009) Ltd. v. Luminati Networks Ltd. (2021), available at Luminati Networks v. B.I. Science, Judgment of the Supreme Court of Israel, 21 Apr 2021 (jusmundi.com) (“In general, after the arbitral award is set aside in the Original Country, it should not be recognized and enforced by virtue of the New York Convention, except for exceptional cases. For example, the decision to set it aside was made by a judicial forum that is not autonomous and independent.”) [translated]. 14Maximov v. Open Joint Stock Co. OJSC “Novolipetsky Metallurgichesky Kombinat” [2017] EWHC (Comm) 1911 (emphasis added); see also Malicorp v. Government of the Arab Republic of Egypt [2015] EWHC (Comm) 361.
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foreign awards as decoupled from the arbitral seat and thus functionally
domestic.15
B
Every circuit court in the United States to consider the matter has held
a foreign court order annulling an arbitration award issued under its own laws
must be given effect unless the foreign order itself is “repugnant to
fundamental notions of what is decent and just.”16 I now address that narrow
caveat.
15 See, e.g., Cour de cassation [Cass.] [supreme court for judicial matters] 1e civ., Oct. 9, 1984, Bull. civ. I, No. 248 (Fr.) (holding French courts must apply “more-favorable-right” provisions of domestic law).
16 Esso Expl. & Prod. Nigeria Ltd. v. Nigerian Nat’l Petroleum Corp., 40 F.4th 56, 71 (2d Cir. 2022) (“[T]he standard . . . for evaluating a petition to enforce an arbitral award that has been annulled in the primary jurisdiction is, simply, whether the foreign judgment setting aside the award is . . . ‘repugnant to fundamental notions of what is decent and just’ in the United States.”) (citation omitted); Getma, 862 F.3d at 48 (“We will enforce an annulled award only if the annulment is ‘repugnant to fundamental notions of what is decent and just’ in the United States.”) (emphasis added) (citation omitted); Corporación Mexicana de Mantenimiento Integral, S. de R.L. de C.V. v. Pemex-Exploración y Producción, 832 F.3d 92, 107 (2d Cir. 2016) (“Pemex”) (“[A foreign] judgment is unenforceable as against public policy to the extent that it is ‘repugnant to fundamental notions of what is decent and just [in the United States.]’”) (emphasis added) (citation omitted); TermoRio, 487 F.3d at 939 (same); Thai- Lao; 864 F.3d at 183-84 (reiterating the Second Circuit’s adoption of the TermoRio formulation); Baker Marine (Nig.) Ltd. v. Chevron (Nig.) Ltd., 191 F.3d 194, 196-97 (2d Cir. 1999) (rejecting appellant’s arguments that the Nigerian judgments annulling the arbitral award were somehow defective as a matter of United States public policy).
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Article V(1)(e) clearly provides awards set aside in the primary
jurisdiction—here, Bolivia—may be unenforceable. But a different section,
Article V(2)(b), provides that recognition and enforcement of an award may be
refused if a secondary jurisdiction concludes recognition or enforcement would
be “contrary to the public policy of that country.” Though the text of the
Convention says nothing about public policy as a ground to refuse recognition
of an Article V(1)(e) vacatur, the majority correctly explains that United States
courts have placed a “public policy gloss” on Article V(1)(e). Maj. Op. at 37-38.
This “public policy gloss” is essentially what CIMSA relied upon in defending
against GCC’s Rule 60(b)(5) motion, R. vol. IV at 890-905, and what the district
court identified as the “narrow public policy exception to the principle of comity
under” the Convention, id. vol. V at 1212.
If we are to venture beyond the text of the Convention, however, we again
would be wise to consider its drafting history.
The drafters favored a narrow public policy exception to recognition and
enforcement of an arbitral award set aside in the primary jurisdiction. The
Convention delegates sought to “limit the scope of the public policy clause as
far as possible.” 2 Pieter Sanders, International Commercial Arbitration 323
(1960). The narrow exception under Article V(2)(b) represented a change from
the 1927 Geneva Convention, which required an affirmative demonstration
that “recognition or enforcement of the award [would not be] contrary to the
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public policy or to the principles of the law of the country in which it is sought
to be relied upon.” Convention on the Execution of Foreign Arbitral Awards,
Sept. 26, 1927, art. 1(e), 92 L.N.T.S. 301.
The public policy exception asks whether the award is “distinctly
contrary to the basic principles of the legal system of the country where the
award is invoked.” U.N. Econ. & Soc. Council, Report of the Committee on the
Enforcement of International Arbitral Awards, Mar. 28, 1955 (UN Doc.
E/AC.42/4/Rev.1), at 13; see Slaney v. Int’l Amateur Athletic Fed’n, 244 F.3d
580, 593 (7th Cir. 2001); Fotochrome, Inc. v. Copal Co., 517 F.2d 512, 516 (2d
Cir. 1975). It exists as “a safety valve to be used in those exceptional
circumstances when it would be impossible for a legal system to recognize an
award and enforce it without abandoning the very fundament[al]s on which it
is based.” Secretariat of the United Nations Commission on International
Trade Law, Guide on the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards 240 (2016) (emphasis added); see also U.N. Econ. &
Soc. Council OR, 21st Sess., U.N. Doc. E/2822/Add.4, at 2 (April 3, 1956) and
U.N. Econ. & Soc. Council OR, 11th mtg. at 7, U.N. Doc. E/CONF.26/SR.11
(Sept. 12, 1958) (French and Dutch delegations’ comments during the drafting
process).
I agree with the majority and district court that the public policy defense
has an appropriate place within the New York Convention. It forms part of the
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international bargain by which signatories agree to recognize other
signatories’ decisions, and functions as an “escape device[] designed to protect
the fundamental, mandatory policies of national legal regimes.” 3 Gary B.
Born, International Commercial Arbitration § 26.05(C)(9)(a) (3d ed. 2020). But
the public policy exception is just that—an exception. The district court
correctly acknowledged this limitation in theory yet did not observe it in
practice.
III
The district court assumed, rightly, “that the 2020 [PCT] Order
overturned [the December 2016 PCT Order] and that the Twelfth Judge had
authority to nullify the Damages Award.” R. vol. V at 1215. It correctly
assumed, too, “both courts are ‘competent authorit[ies]’ as defined by Article
V(1)(e).” Id. (alteration in original). The district court then accurately
articulated the exception to comity as “a narrow public policy exception when
a foreign judgment or the foreign proceedings are ‘repugnant to fundamental
notions of what is decent and just.’” Id. at 1211 (emphases added). The district
court rejected CIMSA’s arguments about bias and corruption in Bolivia and
concluded the 2020 PCT Order annulling the arbitration award was not
repugnant to United States public policy. Id. at 1215 (“I do not consider the
2020 orders themselves to be ‘repugnant to fundamental notions of what is
decent and just’ in the United States . . . .”) (citation omitted). Everyone—the
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district court, the majority, Maj. Op. at 40, 51 n.31, and I—agree on this point.
That should end the discussion and require reversal.
Having found the 2020 PCT Order itself not repugnant, the district court
should have afforded comity to the Bolivian decree and vacated its
Confirmation Judgment, which enforced a now-null foreign arbitral award.
Instead, the district court refused to vacate its Confirmation Judgment
because this would mean enforcing the 2020 PCT Order and that enforcement
would be “repugnant” to “fundamental notions of what is decent and just.” R.
vol. V at 1215-16.
The majority affirms the district court’s application of this
enforcement-focused repugnancy standard. According to the majority, “[a]
district court may decline to enforce a primary jurisdiction’s annulment order
if the order itself is repugnant or if enforcing that order would offend public
policy.” Maj. Op. at 33. Per the majority’s “either-or” framing, district courts in
this circuit now may refuse to afford comity to foreign judgments under the
New York Convention if either the foreign judgment itself is repugnant or the
enforcement of that judgment would offend, or simply “undermine,” public
policy. Id. at 33, 40. This is an extraordinary grant of discretionary power to
district courts, unsupported by the Convention—which sought to circumscribe
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such open-ended discretion—or cases interpreting it.17 Nevertheless, the
majority adopts this novel test, convinced the “the Convention supports” this
approach and “[t]he Second Circuit articulated” it. Id. at 33. I respectfully
disagree on both fronts.
First, the text of the Convention supports neither the district court’s
enforcement-focused repugnancy test nor the majority’s either-or analysis. A
treaty’s text is always paramount but becomes especially important when
reviewing exercises of jurisprudential power not otherwise provided for. See
Medellín, 552 U.S. at 506.
Recall, in studying the Convention, we see the public policy exception in
Article V(2)(b) permits a refusal to enforce an award on public policy grounds.
Article V(2)(b) does not provide a defense to the enforcement of foreign court
judgments. TermoRio, 487 F.3d at 937 (“A judgment whether to recognize or
enforce an award that has not been set aside in the State in which it was made
is quite different from a judgment whether to disregard the action of a court of
17 Nor is it the legal standard understood by the parties. In opposing Rule 60(b)(5) relief, CIMSA identified at least five separate grounds on which the district court should find the 2020 PCT Orders to be the product of corruption or bias or brazen legal error. CIMSA did not rely on the repugnancy of enforcement; it offered, instead, reasons a U.S. court might find the foreign judgment repugnant.
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competent authority in another State.”). Though the majority suggests this is
a “cramped view,” Maj. Op. at 39, it is what the Convention prescribes.
Eschewing the text, the majority cites only one case, TermoRio, which
supposedly approves a public policy enforcement defense to Article V(1)(e)
vacaturs. Maj. Op. at 37-38. The TermoRio court accepted there may be “a
narrow public policy gloss on Article V(1)(e).” 487 F.3d at 939. However, it did
not say, as the majority posits, that the secondary jurisdiction’s enforcement
may be the sole focus of the public-policy inquiry. It said just the opposite. A
“foreign judgment is unenforceable as against public policy to the extent that it
[the foreign judgment] is ‘repugnant to fundamental notions of what is decent
and just in the United States.’” Id. (emphases added) (quoting Tahan v.
Hodgson, 662 F.2d 862, 864 (D.C. Cir. 1981)). Contrast this with the majority’s
new formulation of the legal standard: “We conclude that when a court has
been asked to vacate an order confirming an arbitral award that has later been
annulled, it may balance against comity considerations (1) whether the
annulment is repugnant to U.S. public policy or (2) whether giving effect to the
annulment would undermine U.S. public policy.” Maj. Op. at 40.
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Second, our sister circuits have consistently rejected the test performed
by the district court and affirmed by the majority.18
In Getma, the D.C. Circuit emphasized the determination of repugnancy
looked to the foreign judgment itself. See 862 F.3d. at 47 (“For us to intervene
in this quintessentially foreign dispute, we would need to find the CCJA’s
annulment of the award to be repugnant to the United States’s most
fundamental notions of morality and justice.”) (emphasis added); id. at 48 (“We
will enforce an annulled award only if the annulment is ‘repugnant to
fundamental notions of what is decent and just’ in the United States.”
(emphasis added) (citation omitted)); id. at 49 (“In any event, even if the parties
intended to opt out of the CCJA’s fee schedule, the CCJA’s decision to enforce
its set fees for arbitrators is not ‘repugnant to fundamental notions of what is
decent and just in the United States.’” (emphasis added) (citation omitted)).
And recall the D.C. Circuit in TermoRio referred to the foreign judgment, not
18The majority first affirmatively states “[t]he Second Circuit articulated” the repugnancy-enforcement test used here, Maj. Op. at 33, but later, the majority claims only that the Second Circuit in Pemex and Thai-Lao never explicitly rejected its approach, id. at 42. Respectfully, the majority and I must read these opinions very differently. In both Pemex and Thai-Lao, the Second Circuit’s central focus for public policy purposes was the foreign order itself. See, e.g., Pemex, 832 F.3d at 108 (finding extension of comity inappropriate in part because Mexican judgment was based on “[r]etroactive legislation that cancels existing contract rights” and “is repugnant to United States law”).
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the U.S. court’s enforcement, as the source of potential repugnancy. 487 F.3d
at 938; see also id. at 941 (“We must honor the judgment of the Colombia court
vacating the disputed arbitration award, because there is nothing in the record
here indicating that the proceedings before the Consejo de Estado were fatally
flawed or that the judgment of that court is other than authentic.”).
Confronted with these cases, the majority seeks shelter in the Second
Circuit’s Pemex and Thai-Lao decisions. Maj. Op. at 33-37. True, the language
in both Pemex and Thai-Lao references the repugnancy of the foreign
judgments and their enforcement in this country. But a closer look reveals
little more than first-blush support for the majority’s reasoning.
Pemex and Thai-Lao did not do what the district court and majority do
here: find the foreign judgment itself was not violative of this country’s public
policy but still refuse to enforce it. In Pemex, for example, the court found the
Mexican decision at issue involved “retroactive legislation” and the “taking of
private property without compensation” by Mexican authorities. 832 F.3d at
107-08, 110. Given these concerns with the repugnancy of the Mexican
judgment itself, enforcing that judgment would “offend[] basic standards of
justice in the United States.” Id. at 111.19 Thai-Lao, citing Pemex, adopted the
19At note 22, the majority claims this “reading conflicts with the overarching conclusion in Pemex” and further contends the Second Circuit “plainly was primarily concerned with the enforcement of, or giving effect to,” the Mexican order, not the repugnancy of the Mexican order itself. The majority’s
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same approach: enforcement or vacatur might offend United States public
policy but only if there was something about the parties’ conduct or the foreign
courts’ reasoning that “so tainted” the foreign order itself. 864 F.3d at 175.
These cases confirm the public policy/repugnancy analysis turns on the
repugnancy of the foreign judgment. See Esso, 40 F.4th at 73 (“Pemex teaches
that a district court should enforce an award that was set aside in the primary
jurisdiction . . . only if the judgment setting aside the award can be properly
understanding, and its attendant suggestion Pemex supports a district court’s discretion to decline enforcement of non-repugnant foreign judgments, is not one for which I can discern support in Pemex itself. See Pemex, 832 F.3d at 111 (“[T]he Southern District exercised discretion . . . to assess whether the nullification of the award offends basic standards of justice in the United States.”) (emphasis added); id. at 100 (affirming the district court’s confirmation of the award “on the ground that annulment of the award ‘violated basic notions of justice in that it applied a law that was not in existence at the time the parties’ contract was formed and left COMMISA without an apparent ability to litigate its claims’” (emphasis added) (quoting Corporación Mexicana de Mantenimiento Integral, S. de R.L. de C.V. v. Pemex Exploración y Producción, 962 F. Supp. 2d 642, 644 (S.D.N.Y. 2013))).
Nor does the majority’s understanding accord with the Second Circuit’s own understanding of Pemex. According to the majority, the Pemex court “never said that the foreign annulment order itself violated public policy,” Maj. Op. at 41, but Esso unambiguously understood Pemex to involve a repugnant foreign order. See 40 F.4th at 73 (“Pemex teaches that a district court should enforce an award that was set aside in the primary jurisdiction . . . only if the judgment setting aside the award can be properly characterized as ‘repugnant to fundamental notions of what is decent and just’ in the United States, in which case reliance on the judgment would be contrary to U.S. public policy.”) (emphasis added); see also id. at 74 (“Esso has not carried its burden under Pemex of showing that the Nigerian judgments partially setting aside the Award clearly contravene U.S. public policy.”) (emphasis added).
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characterized as ‘repugnant to fundamental notions of what is decent and just’
in the United States, in which case reliance on the judgment would be contrary
to U.S. public policy.”) (emphasis added).
To the extent the foreign judgment is repugnant as against United States
public policy, therefore, it obviously would be repugnant to enforce it here. This
makes all the sense in the world under the Convention: it preferences the
arbitral seat’s processes and judgments while preserving the narrow discretion
of the secondary jurisdiction. Cf. Laker Airways Ltd. v. Sabena, Belgian World
Airlines, 731 F.2d 909, 937 (D.C. Cir. 1984) (“[F]rom the earliest times,
authorities have recognized that the obligation of comity expires when the
strong public policies of the forum are vitiated by the foreign act.”) (emphasis
If Pemex and Thai-Lao created a misimpression, the Second Circuit no
longer labors under it. Writing for the Second Circuit in Esso, Judge Carney
(who also authored Thai-Lao) could not have been clearer:
[W]e clarify that the standard set forth in Pemex for evaluating a petition to enforce an arbitral award that has been annulled in the primary jurisdiction is, simply, whether the foreign judgment setting aside the award is, in the operative phrase, “repugnant to fundamental notions of what is decent and just” in the United States.
40 F.4th at 71 (emphasis added) (citation omitted).
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In the D.C. and Second Circuits, the appropriate question is thus
whether there is something about the foreign judgment itself, or the processes
that yielded it, that violates fundamental notions of decency and justice in the
United States. In this circuit, by contrast, a court now may balance against
comity “whether the annulment is repugnant” or “whether giving effect to the
annulment would undermine U.S. public policy.” Maj. Op. at 40. This is a
novelty anchored neither by text nor precedent and one that I cannot endorse.
Here, when confronted with whether the 2020 Bolivian orders were
“repugnant,” the district court unambiguously answered “no.” R. vol. V at 1215.
Unlike the court in Pemex, which had identified fundamental problems
implicating the repugnancy of the annulment order, the district court here
found none. At this point, the district court should have recognized the “power
and authority of the local courts of the rendering state remain[ing] of
paramount importance,” Yusuf, 126 F.3d at 22, and acknowledged the
presumptive comity interests counseling vacatur of the Confirmation
Judgment. Instead, it refused to afford comity and enforced a null award.
Unlike my colleagues in the majority, I would have followed the consistent
approach of our sister circuits and reversed on this issue alone.
IV
Even under the majority’s repugnancy-enforcement test, the district
court committed reversible error in performing the New York Convention’s
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public policy balancing analysis, which resulted in denial of GCC’s Rule
60(b)(5) motion.
First, the district court neglected to situate comity as the “guiding value”
against which to weigh the proffered public policy interest under the
Convention. Esso, 40 F.4th at 74.
Second, the district court mistakenly determined vindicating finality
interests, without more, could overcome the presumptive extension of comity
under the Convention.
Third, the district court impermissibly second guessed the decisions of
Bolivia’s highest court.
According to the majority, “[w]hen a primary jurisdiction has annulled
an arbitral award, a secondary jurisdiction must balance comity to the foreign
annulment order against its country’s public policy.” Maj. Op. at 21. But a
primary jurisdiction’s judgment annulling an arbitration award deserves
comity unless outweighed by a relevant public policy interest of the secondary
jurisdiction. See Pemex, 832 F.3d at 106 (“[A] final judgment obtained through
sound procedures in a foreign country is generally conclusive . . . unless . . .
enforcement of the judgment would offend the public policy of the state in
which enforcement is sought.”) (alterations in original) (quotation omitted); see
also Thai-Lao, 864 F.3d at 184 (“[Pemex] recognized a strong presumption in
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favor of following the primary jurisdiction’s ruling.”). The majority expresses
confusion about what “presumption of comity” means. Maj. Op. at 57.20 But the
answer is clear: the New York Convention is not an ordinary balancing test
between coequal values, so district courts must drop the anchor at the right
place and presume comity will be afforded absent some prevailing public policy
concern.
“Comity is not just a vague political concern favoring international
cooperation when it is in our interest to do so. Rather it is a principle under
which judicial decisions reflect the systemic value of reciprocal tolerance and
goodwill.” Société Nationale Industrielle Aérospatiale v. U.S. Dist. Ct. for S.
Dist. of Iowa, 482 U.S. 522, 555 (Blackmun, J., concurring in part and
20The majority says “presumption of comity” is a phrase that “does not appear in the Convention or any of the cases discussed here.” Maj. Op. at 57. Yet that language derives from, and faithfully describes, the applicable law. See Pemex, 832 F.3d at 106 (“Accordingly, ‘a final judgment obtained through sound procedures in a foreign country is generally conclusive . . . unless . . . enforcement of the judgment would offend the public policy of the state in which enforcement is sought.’” (alterations and emphasis in original) (quoting Ackermann, 788 F.2d at 837)); Thai-Lao, 864 F.3d at 184 (noting the court in Pemex “nonetheless recognized a strong presumption in favor of following the primary jurisdiction’s ruling”) (emphasis added); Esso, 40 F.4th at 61 (“[T]he district may exercise its discretion to enforce a set-aside award only where the primary jurisdiction’s judgment vacating the award is ‘repugnant to fundamental notions of what is decent and just’ in the United States, a standard that we have cautioned is ‘high, and infrequently met.’ Otherwise, the district court is obligated to afford comity to the foreign court’s judgment and must decline to enforce the arbitral award that the foreign court set aside.”) (emphasis added) (citation omitted).
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dissenting in part). Comity is part of the “true foundation on which the
administration of international law must rest,” one of the vital “rules . . . which
arise from mutual interest and utility, from a sense of the inconveniences
which would result from a contrary doctrine.” Joseph Story, Commentaries on
the Conflict of Laws § 35 (M. Bigelow ed., 8th ed. 1883). It is not a light courtesy
afforded; it is a “moral necessity to do justice, in order that justice may be done
to us in return.” Id.
Comity considerations are at their apex when, as here, there is no United
States involvement. Spier v. Calzaturificio Tecnica, S.p.A., 71 F. Supp. 2d 279,
286 (S.D.N.Y. 1999) (finding comity concerns particularly heightened where
the governing documents “‘make no reference whatever to United States law,’
and ‘[n]othing suggests that the parties intended United States domestic
arbitral law to govern their disputes’” (alteration in original) (quoting Baker
Marine, 191 F.3d at 197)); cf. Matter of Colo. Corp., 531 F.2d 463, 468 (10th
Cir. 1976) (“Comity is withheld when the granting of recognition of foreign laws
would prejudice the rights of the forum’s own citizens. We cannot see how
[recognizing foreign decrees] can prejudice American citizens.”) (citation
In Hilton v. Guyot, 159 U.S. 113 (1895), the Supreme Court explained
comity should be afforded to a foreign judgment when certain guarantees have
attached to the foreign proceeding. These requirements are satisfied when
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there has been opportunity for a full and fair trial abroad before a court of competent jurisdiction, conducting the trial upon regular proceedings, after due citation or voluntary appearance of the defendant, and under a system of jurisprudence likely to secure an impartial administration of justice between the citizens of its own country and those of other countries, and there is nothing to show either prejudice in the court, or in the system of laws under which it was sitting, or fraud in procuring the judgment, or any other special reason why the comity of this nation should not allow it full effect . . . . Id. at 202. Hilton did not endorse refusals to recognize foreign judgments based
only on the fact that the processes of other countries may, literally, be foreign
to our own. Id. at 205 (“[W]e are not prepared to hold that the fact that the
[foreign] procedure . . . differed from that of our own courts is, of itself, a
sufficient ground for impeaching the foreign judgment.”).
Interpreting Hilton, we have explained principles of comity “require
recognition of a foreign judgment” if these basic due process guarantees are
met. Society of Lloyd’s v. Reinhart, 402 F.3d 982, 999 (10th Cir. 2005)
(emphasis added) (summarizing Hilton factors); cf. Her Majesty the Queen in
Right of the Province of B.C. v. Gilbertson, 597 F.2d 1161, 1163 (9th Cir. 1979)
(“Generally, judgments from a foreign country are recognized by the courts of
this country when the [Hilton] principles of comity are satisfied.”). Our court
will refuse comity only if due process is so absent that the foreign jurisdiction’s
courts function as “rogue bodies that deny due process to litigants.” Leser v.
Berridge, 668 F.3d 1202, 1208 n.2 (10th Cir. 2011).
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Comity also generally precludes us from inquiring into the merits of
foreign adjudications, or another signatory’s interpretation of its own law. See
Navani v. Shahani, 496 F.3d 1121, 1128 (10th Cir. 2007) (finding English
court’s interpretation of English law to be “entitled to our respect”); Shealy v.
Shealy, 295 F.3d 1117, 1123 (10th Cir. 2002) (refusing to “second guess” a
German court’s interpretation of German law).
The majority says comity is not a command. Maj. Op. at 77. It is, though,
a central corollary of our own sovereignty and the deference due to a world that
does not halt at our frontiers. Comity concerns are acute in international
commercial arbitration, which depends on states giving effect to the outcome
of proceedings in countries with processes and laws different from their own.
W. Michael Reisman, Systems of Control in International Adjudication and
Arbitration 139 (1992).
The Second and D.C. Circuits have uniformly recognized the need to
approach the question of vacated foreign arbitral awards with the same
deferential presumption of comity the district court here neglected to extend.
The D.C. Circuit has stressed the presumption of comity attaches to valid
foreign judgments under the Convention. In TermoRio, the court found lawful
annulment by a competent court in the arbitral seat destroyed any cause of
action for enforcement in the United States. 487 F.3d at 930. “The Convention
does not endorse a regime in which secondary States (in determining whether
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to enforce an award) routinely second-guess the judgment of a court in the
primary State . . . .” Id. at 937.
The Second Circuit in Thai-Lao affirmed it is an extraordinary case that
will present those “rare circumstances” in which “it would not be an abuse of
discretion to reject the demands of comity in favor of honoring public policy.”
864 F.3d at 184 (citation omitted). It emphasized, too, the “prudential concerns
for international comity and the high standard for overcoming the presumptive
effect of a primary jurisdiction’s annulment.” Id. at 186. Thai-Lao further
acknowledged the “annulment of an arbitral award in the primary jurisdiction
should . . . be given significant weight” within the context of the Rule 60(b)(5)
determination, id., particularly when, “although we might not necessarily
agree with the merits of the [primary jurisdiction’s] judgments, we see no
grounds for [public policy] concerns,” id. at 187.
And in Esso, the Second Circuit again affirmed comity as “a vital
prudential concern,” reiterated that repugnancy is a “demanding” standard,
and clarified that Article V(1)(e) is not “an invitation to a relaxed exercise of
impressionistic discretion.” 40 F.4th at 73. Absent a “clear adverse effect on . .
. fundamental public policy concerns, comity stands firmly as our guiding
value,” id., and annulment orders issued in the arbitral seat would be
“conclusive,” id. at 63.
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The district court should have started its balancing inquiry with comity
considerations at their zenith. This is not a case where the record evidenced
the due process concerns identified in Hilton or the Restatements. And only
foreign, private parties are involved. The remaining question was whether a
prevailing United States public policy interest, necessary to vindicate
fundamental notions of decency and justice, existed here to override the
presumption of comity due to the 2020 PCT Order. On this record, none exists.
“Public policy” first appears to be an ethereal concern permitting
unbounded, interpretive discretion. Like comity, however, public policy is a
concrete concept, well developed by U.S. courts and particularly well defined
in the Convention context.
The Supreme Court assigns the assessment of public policy to judges.
W.R. Grace & Co. v. Local Union 759, 461 U.S. 757, 766 (1983) (“[T]he question
of public policy is ultimately one for resolution by the courts.”). But “public
policy . . . is a very unruly horse, and when once you get astride it you never
know where it will carry you.” Richardson v. Mellish [1824] 2 Bing 229, 252
(Burrough, J.). United States courts have recognized the “extremely narrow”
nature of the public policy exception. The Supreme Court requires an invoked
public policy be “explicit,” “well defined and dominant,” ascertained by
“reference to the laws and legal precedents and not from general considerations
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of supposed public interests.” W.R. Grace & Co., 461 U.S. at 766 (quoting
Muschany v. United States, 324 U.S. 49, 66 (1945)).
In the Convention context, it takes “much more than a mere assertion
that the judgment of the primary State ‘offends the public policy’ of the
secondary State to overcome a defense raised under Article V(1)(e).” TermoRio,
487 F.3d at 937; see also Europcar Italia, S.p.A. v. Maiellano Tours, Inc., 156
F.3d 310, 315 (2d Cir. 1998) (“[T]his public policy exception is to be construed
very narrowly and should be applied ‘only where enforcement would violate
our most basic notions of morality and justice.’”) (citations omitted). A “roving
‘public policy exception,’” Baker by Thomas v. Gen. Motors Corp., 522 U.S. 222,
233 (1998), would become a “parochial device protective of national political
interests [and] would seriously undermine the Convention’s utility,” Parsons
& Whittemore Overseas Co. v. Société Generale de L’Industrie du Papier, 508
F.2d 969, 974 (2d Cir. 1974). The delegates to the Convention knew of the
hazards posed by “parochial views” of the signatories’ courts. Scherk v. Alberto-
Culver Co., 417 U.S. 506, 520 n.15 (1974) (citing G. Haight, Convention on the
Recognition and Enforcement of Foreign Arbitral Awards: Summary Analysis
of Record of United Nations Conference 24-28 (May/June 1958)); see also Linda
Silberman, The New York Convention After Fifty Years: Some Reflections on
the Role of National Law, 38 Ga. J. Int’l & Comp. L. 25, 35 (2009) (“Of course,
the standard for ‘public policy’ in the context of the New York Convention and
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international arbitration should not be one of parochial or national interests,
but of broader international scope.”).
The Convention’s public policy exception thus applies only in cases
implicating “the forum state’s most basic notions of morality and justice.”
Vantage Deepwater Co. v. Petrobras America, Inc., 966 F.3d 361, 370 (5th Cir.
2020) (quoting Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan
Gas Bumi Negara, 364 F.3d 274, 306 (5th Cir. 2004)). One instructive example
of such a well-defined public policy is the national policy of refusing to
recognize certain foreign defamation judgments emanating from courts or
jurisdictions considered insufficiently protective of the freedom of speech. See
Securing the Protection of our Enduring and Established Constitutional
Heritage Act (“SPEECH” Act), Pub. L. 111-223, 124 Stat. 2381 (2010) (codified
at 28 U.S.C. § 4102); Trout Point Lodge, Ltd. v. Handshoe, 729 F.3d 481 (5th
Cir. 2013) (declining to enforce Canadian judgment on this ground). Hilton
itself concerned certain clear procedural rights protected by our Constitution
and elaborated upon for over a century. It is thus a “rare case[]” that will
present the “extraordinary circumstances” required. Esso, 40 F.4th at 74.
Unlike the majority opinion, our sister circuits uniformly emphasize the
narrowness of the public policy gloss.
The Second Circuit in Baker Marine focused on the hazards of the public
policy defense as imported to Article V(1)(e). Enforcement of annulled awards,
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the court reasoned, would thwart the purpose of the Convention by “seriously
undermin[ing] finality and regularly produc[ing] conflicting judgments.” 191
F.3d at 197 n.2. These conflicting judgments would encourage global forum
shopping, as the losing party would “pursue its adversary ‘with enforcement
actions from country to country until a court is found, if any, which grants the
enforcement.’” Id. (citation omitted).
The D.C. Circuit in TermoRio acknowledged the public policy exception
existed, but only when the foreign judgment was “repugnant to fundamental
notions of what is decent and just,” 487 F.3d at 938 (emphases added) (quoting
Ackermann, 788 F.2d at 841); absent these extraordinary circumstances, when
a foreign court has lawfully annulled a foreign arbitral award, “United States
courts should not go behind that decision,” id. (citation omitted).
And in Getma, the D.C. Circuit understood the fundamental notions
standard to be a “demanding burden” and “infrequently met.” 862 F.3d at 48
(citation omitted). U.S. courts should not “enforce an annulled award on a mere
showing that the annulment is erroneous or conflicts with the United States’s
public policy.” Id. at 48-49 (citing TermoRio, 487 F.3d at 938). The latter
ground required something “offensive to ‘basic notions of morality and justice.’”
Id. at 50 (quoting TermoRio, 487 F.3d at 938).
Even the Second Circuit’s Pemex decision, which confirmed an annulled
award, ultimately clarifies the fineness of the Convention’s public policy gloss.
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The Pemex court warned United States courts “should act with trepidation and
reluctance in enforcing an arbitral award that has been declared a nullity by
the courts having jurisdiction over the forum in which the award was
rendered.” 832 F.3d at 111. The majority dismisses this aspect of Pemex,
viewing the repugnancy standard as a catch-all concern providing a losing
foreign litigant any number of vetoes in United States court. See Maj. Op. at
24-25. That reading does not withstand scrutiny. Pemex concerned
extraordinary circumstances implicating the parties’ fundamental rights—
whether the very existence of substantive rights or the availability of a forum
in which to vindicate them.21
The weight of authority shows only dominant, well-defined, and clearly
expressed public policies might surmount the presumption of comity in the
Convention context. Here, against that strong presumption, the district court
set an interest in “finality.” As the majority correctly notes, various decisions
outside the Convention context acknowledge finality as an important United
States public policy. Maj. Op. at 48-49 n.27. And protecting the finality of
judgments in our courts fits well within “the full range of interests” under Rule
21According to the majority, “The different procedural posture of this case compared to Pemex should make our deference to the district court stronger because GCC sought to undo a judgment.” Maj. Op. at 51 n.30. Again, I fail to understand how deferential appellate review can insulate legal error, notwithstanding any difference in procedural posture.
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60(b), Thai-Lao, 864 F.3d at 186, which, of course, itself exists “to make an
exception to finality,” Buck v. Davis, 137 S. Ct. 759, 779 (2017) (citation
omitted). But I would not conclude, as the majority does, Maj. Op. at 54-55,
that a public policy under Rule 60(b)(5) is identical to the term “public policy”
used in Article V(2)(b) of the New York Convention.22 Rather, I question
whether finality is so dominant and clearly defined an interest as to qualify as
a United States public policy for a repugnancy analysis under the Convention
and, even if it so qualifies, whether it alone rises to the level of repugnancy as
something so offensive to our laws.23 The majority says yes to both; I disagree.
22 In grounding its new permissive approach to the Convention’s public policy exception, the majority appears to conflate “public policy” in the general sense—i.e., the way we might discuss zoning policy—with “public policy” in the Convention’s Article V(2)(b) exception. Maj. Op. at 55 (“[T]he Convention . . . does not define ‘public policy’ and says nothing about what counts as a valid public policy concern.”). Perhaps the majority is suggesting any and every U.S. “public policy” is a “public policy” for purposes of the Convention, but I see no support for such an unbounded approach.
23 Our courts have rejected a “doctrine of disability at self-correction.” Helvering v. Hallock, 309 U.S. 106, 121 (1940). Indeed, the procedures of our own appellate courts contemplate revisiting decisions in the same case under appropriate circumstances. See Fed. R. App. P. 40, 10th Cir. R. 40 (providing for panel rehearing); Fed. R. App. P. 35, 10th Cir. R. 35 (providing for rehearing en banc). Error correction seems precisely what the Bolivian PCT was engaged in by explaining and reconciling the conflict between two 2016 orders issued by different chambers of the same body.
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To start, what was the finality interest the district court identified for
the Convention’s public policy exception? Reading the record, it is hard to tell.
Recall, CIMSA’s public policy pitch consisted of attacks on the Bolivian
judiciary and the merits of the 2020 PCT Order under Bolivian law. The
district court rejected those arguments. R. vol. V at 1215. Instead, the district
court focused only on vindicating finality interests. Id. at 1218. As the majority
explains, the district court determined “granting GCC relief would undermine
the finality of the Confirmation Judgment and the arbitral award.” Maj. Op.
at 47 (emphasis added). “Repugnant,” the district court declared, “is a fitting
description of proceedings without end.” R. vol. V at 1216.
If the district court anchored its finality concerns to the 2016 PCT
Orders, this would be problematic. GCC persuasively explains the 2016 PCT
Orders were both conflicting (meaning the district court simply selected one of
the two as its reference point) and clearly not final under Bolivian law (subject,
as they were, to pending litigation at the arbitral seat). Opening Br. at 35. No
one understood there to be a “final” word on the merits of the Damages Award
in Bolivia until the 2020 PCT Order.
If the district court based its finality concerns only on preserving its own
Confirmation Judgment—which seems to be the majority’s reading, see Maj.
Op. at 51 n.31—this is even more troubling. I have no doubt the district court
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was legitimately frustrated, given (as it described) the “congeries of rulings
and clarification orders” in the Bolivian courts and the years of parallel
proceedings contesting the Merits Award and the Damages Award, including
before the district court and this court. R. vol. V at 1201. But even an
objectively understandable interest in protecting the finality of its own
Confirmation Judgment under Rule 60(b)(5) cannot obviate the district court’s
obligation to identify a public policy for Convention purposes—one that would
legitimately satisfy the high bar of the infrequently-met repugnancy standard
and overcome any deference owed to the arbitral seat.
The majority faults GCC for initiating new proceedings in Bolivia after
the district court’s Confirmation Judgment entered and concludes this
“implicates the United States’ interest in the finality of the arbitral award and
the Confirmation Judgment.” Maj. Op. at 32. As an initial matter, no one
understood, or should have understood, the Bolivian proceedings to be final.
CIMSA—and the district court and this court in CIMSA I—knew GCC was
seeking to set aside the arbitral award when CIMSA pursued the Confirmation
Judgment. CIMSA sought enforcement in the United States the next day after
GCC pursued annulment in Bolivia. And GCC sought relief promptly, filing its
Rule 60(b)(5) motion within fifteen days of the 2020 PCT Order. GCC’s
litigation conduct may implicate interests under Rule 60(b)(5), but it is not a
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matter of United States public policy.24 Like the district court, the majority
incorrectly imports a U.S. court’s finality interest under Rule 60(b)(5) into the
distinct public policy exception contemplated by the Convention.
To my knowledge, no other U.S. court has rested its refusal to recognize
a competent jurisdiction’s vacatur of an arbitral award under the New York
Convention only on the ambient “finality” interest invoked here. Thai-Lao,
consistent with the weight of U.S. caselaw, teaches finality is not a shibboleth
to be uttered whenever justice requires us to revisit our prior judgments.
Indeed, Thai-Lao recognizes, in the Convention context, discretion under Rule
60(b)(5) is “constrained by the prudential concern of international comity.” 864
F.3d at 183 (citations omitted). In only one of the cases cited by the majority—
Pemex—did the U.S. court enforce an award annulled at the issuing seat on
any grounds. See Maj. Op. at 23-29. And there, the Pemex court specifically
24 GCC argues convincingly that it was availing itself of rights and remedies under Bolivian law. Opening Br. at 39-44. But in describing the procedural history, the majority uses language that adds an air of the disreputable to what appears just to be lawyering: “GCC convinced a different chamber of [the PCT] to invalidate its prior decision,” Maj. Op. at 2; “GCC initiated a new attempt in Bolivia to annul the Damages Award and succeeded,” id. at 45; “GCC initiated a new attempt at annulment and ultimately succeeded,” id. at 47; “Based on GCC’s repeated attempts to challenge the Damages Award . . .” id.; “Here, GCC attempted to undo the Confirmation Judgment,” id. at 49; “GCC thus continued raising the same challenges in Bolivia until it received the answer it wanted.” Id. at 62 (emphases added). Significantly, the district court did not suggest GCC’s arguments were frivolous or made in bad faith. The record would not support such a conclusion anyway.
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identified compelling public policy interests it understood to override the
presumption of comity. “[I]n the rare circumstances of this case,” the Second
Circuit explained, the district court “did not abuse its discretion by confirming
the arbitral award at issue because to do otherwise would undermine public
confidence in laws and diminish rights of personal liberty and property.”
Pemex, 832 F.3d at 111 (emphasis added) (citing Ackermann, 788 F.2d at 841).
Neither the majority nor the district court explain how extending comity to the
2020 PCT Order to preserve finality of either the Damages Award or the
Confirmation Judgment satisfies this exacting legal standard.
The majority identifies two additional “strong United States interests”
to shore up affirmance: “upholding parties’ contractual expectations” and “the
policy in favor of arbitral dispute resolution.” Maj. Op. at 47-48. The majority
says these interests “support the district court’s conclusion that vacatur of its
Confirmation Judgment would violate U.S. public policy. These considerations
correspondingly support the district court’s decision against extending comity
to the 2020 Bolivian orders.” Id. at 54. Again, the majority blurs the line
between Rule 60(b)(5) and the Convention’s narrow public policy exception. Id.
In any case, neither interest supports denying Rule 60(b)(5) relief to GCC.
First, the majority claims its decision upholds “parties’ contractual
expectations in the arbitration context.” Id. at 52. I don’t see that. The parties
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here agreed to arbitrate under Bolivian, not U.S., law. The majority’s decision
to affirm frustrates that choice by nullifying an undisputedly competent
Bolivian tribunal’s decision and injures the standardizing impulse behind the
Convention. The majority claims its decision enforces the agreement to “allow
parties to ‘foretell with accuracy what will be their rights and liabilities under
the contract.’” Id. (citation omitted). But beyond this circuit becoming a haven
for parties to enforce now-null awards from around the world, I do not read the
majority opinion to advance predictability goals.
And while the decision is a boon for CIMSA, neither parties’ agency is
respected, contrary to the majority’s aim. Maj. Op. at 52-53. I would assume
CIMSA, the Bolivian party to the agreement, knew the possibility of appeal
through the Bolivian judicial system, notwithstanding the parties’ waiver. See
R. vol. IV at 802-03 (CIMSA’s Bolivian litigation counsel explaining Bolivian
law provides “very limited discretion” to refuse appeals for annulment).
Second, the majority identifies an “emphatic federal policy in favor of
arbitral dispute resolution.” Maj. Op. at 53 (quoting Mitsubishi Motors Corp.
v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985)). Mitsubishi, on
which the majority leans for this point, instructively frames its discussion of
the “emphatic federal policy” within the parameters of a “strong presumption
in favor of enforcement of freely negotiated contractual choice-of-forum
provisions.” 473 U.S at 631. But the majority dilutes this “strong presumption,”
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essentially holding our court is a more competent decisionmaker than the
Bolivian arbitrators and the Bolivian PCT.25 And what the majority describes
as this country’s pro-enforcement bias, Maj. Op. at 53, is better understood as
a pro-comity bias. The extension of comity is a first principle of the Convention
and essential to international arbitration. It also benefits the development of
business and industry, which “will hardly be encouraged if . . . we insist on a
parochial concept that all disputes must be resolved under our laws and in our
courts.” M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 9 (1972). The district
court’s decision and the majority opinion seem to reject, rather than enforce,
the parties’ freely negotiated contractual choice to arbitrate and litigate in
Bolivia.
C
Finally, the district court also departed from fundamental comity
principles by detouring into several discrete commentaries on the merits of the
25The majority’s reliance on In re Arb. Between Chromalloy Aeroservices & Arab Republic of Egypt, 939 F. Supp. 907, 913 (D.D.C. 1996), is ill placed. As the same court later noted, “[t]he court’s decision in Chromalloy is both questionable on the merits and distinguishable on the facts. . . . [T]here is no . . . U.S. party involved in this case, as there was in Chromalloy. The lack of a U.S. party diminishes the U.S. interest in applying U.S. law; indeed, the presence of a U.S. party in Chromalloy arguably was decisive.” TermoRio S.A. E.S.P. v. Electrificadora Del Atlántico S.A. E.S.P., 421 F. Supp. 2d 87, 98-99 (D.D.C. 2006).
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Bolivian proceedings. The majority appears untroubled by the district court’s
observations.
As the majority correctly acknowledges, “the secondary jurisdiction’s role
is not to second-guess the primary jurisdiction’s ‘substantive determinations
made under [its own] law.’” Maj. Op. at 27 n.11 (quoting Esso, 40 F.4th at 74).
It is well settled the Convention “does not endorse a regime in which secondary
States . . . second-guess the judgment of a court in a primary State.” TermoRio,
487 F.3d at 937; see also Medellín v. Dretke, 544 U.S. 660, 670 (2005) (Ginsburg,
J., concurring) (“It is the long-recognized general rule that, when a judgment
binds or is respected as a matter of comity, a ‘let’s see if we agree’ approach is
out of order.”). Only in exceptional circumstances would Hilton permit
revisiting the merits of a foreign case. 159 U.S. at 202-03.
The 2020 PCT Order explained the later of the two 2016 Orders was a
juridical nullity because “it is not possible to file two or more legal protection
proceedings with the same purpose whenever a prior action is pending.” R. vol.
IV at 713. All agree this substantive determination on a matter of Bolivian law
upended the legal basis for the Confirmation Judgment. The district court’s
“analysis [should] go no further: it is simply not [a] court’s role to engage in a
more probing analysis of the substance of [another] court’s judgments.” Esso,
40 F.4th at 75; see also Ingenohl v. Walter E. Olsen & Co., 273 U.S. 541, 544
(1927) (where the “final exponent of th[e] law[] authoritatively declares” its
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meaning, “we do not see how it is possible for a foreign Court to pronounce
[that] decision wrong”).
Yet, the district court:
questioned if the PCT correctly concluded Bolivian law trumped the
parties’ contractual agreement not to appeal, R. vol. V at 1217 n.11;
opined the “2020 Procedural Order reversed a well-reasoned decision by
the PCT . . . on two specious grounds,” id. at 1216 n.9 (emphases added);
expressed doubts about the authority of a Bolivian judge to annul the
arbitration award, id. at 1215 n.8;
looked outside the record to suggest the 2020 PCT Order was motivated
by bias against CIMSA’s principal, id. at 1214 n.7; and
viewed the timing of the 2020 PCT Order as suspiciously “serendipitous”
given the country’s ongoing election, id. at 1214-15 n.7.
The CIMSA I panel humbly recognized Bolivian foreign proceedings
might not “follow an entirely familiar pattern.” CIMSA I, 970 F.3d at 1296. I
agree and thus confess unease with the district court’s subjective views on
matters of Bolivian law and government. United States v. Caceres, 440 U.S.
741, 766 (1979) (Marshall, J., dissenting) (“[J]udges do not lightly cast
aspersions on the motives of government officials . . . .”); Chesley v. Union
Carbide Corp., 927 F.2d 60, 66 (2d Cir. 1991) (“It is not the business of our
courts to assume the responsibility for supervising the integrity of the judicial
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system of another sovereign nation.”) (citation omitted). It was improper for
the district court to so comment, even though it disclaimed any intention of
“close review of a foreign sovereign’s judicial or political systems.” R. vol. V at
1215. The district court’s disagreement with substantive determinations of
Bolivian law might explain why it gave no deference to the foreign courts where
the arbitration took place and whose law the parties chose to govern their
dispute.
V
I end with two practical observations.
First, today’s decision may create an unwarranted split between our
court and the Second and D.C. Circuits. Our sister circuits have
unambiguously held the narrow public policy exception in the Convention
focuses on the repugnancy of the foreign judgment, not its enforcement, supra
at Part III. Relying on Second Circuit opinions since clarified, the majority
tacks in the opposite direction. Maj. Op. at 40. This split frustrates the
predictability and administrability of an otherwise successful Convention.
Focusing on procedural posture, the majority claims there is no split
because “no other circuit has reviewed a district court’s denial of a Rule 60(b)(5)
motion to vacate a judgment confirming a foreign arbitral award based on a
later foreign annulment order.” Maj. Op. at 44 n.24. But our sister circuits have
addressed the precise substantive question at issue in this case and have
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determined the foreign judgment to be the operative focus of potential
repugnancy. The question isn’t new; the majority’s answer is.
Second, we undermine the most basic foundation of private arbitration—
that the parties are autonomous and may choose the seat and laws of their
arbitral proceedings—when the decisions rendered in their chosen seat have
no meaning here. We encourage global forum shopping and forum shopping
among the circuits. We undermine finality by leaving standing two competing
decisions, the Bolivian high court’s judgment setting aside an award and the
District of Colorado’s contrary Confirmation Judgment, and thus encourage
every losing party “to pursue its adversary ‘with enforcement actions from
country to country until a court is found . . . which grants the enforcement.’”
Baker Marine, 191 F.3d at 197 n.2 (citation omitted).26
For these reasons, I would reverse the district court’s refusal to vacate
its enforcement of a null arbitration award, and I respectfully dissent from the
contrary judgment of my colleagues in the majority.
26 There is also, as the majority correctly observes, a Mexican court decision forbidding GCC from complying with any asset turnover requests globally, based on the comity that court afforded to the Bolivian PCT. Reply Br. Addenda 2-4. I note this court in CIMSA I (1) observed pending proceedings in Mexico regarding the Awards’ validity and (2) believed they were more efficient than those here. CIMSA I, 970 F.3d at 1291.
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Cite This Page — Counsel Stack
Compania De Inversiones v. Grupo Cementos de Chihuahua, Counsel Stack Legal Research, https://law.counselstack.com/opinion/compania-de-inversiones-v-grupo-cementos-de-chihuahua-ca10-2023.