DRC, Inc. v. Republic of Honduras

999 F. Supp. 2d 1, 2012 WL 10057466, 2012 U.S. Dist. LEXIS 189641
District Court, District of Columbia·Decided June 11, 2012·No. Civil Action No. 10-0003 (PLF)·Published·Cited by 7 cases

Opinion

OPINION AND ORDER

PAUL L. FRIEDMAN, United States District Judge

This matter is before the Court on the motion of petitioner, DRC, Inc., to lift the stay imposed by the Court in its March 28, 2011 Order, or, in the alternative, to order respondent, the Republic of Honduras, to provide security. The Republic of Honduras opposes DRC’s motion.

After briefing on DRC’s motion was complete, the United States Court of Appeals for the District of Columbia Circuit issued its decision in Belize Social Development Ltd. v. Government of Belize (“BSDL”), 668 F.3d 724 (D.C.Cir.2012). Because the court of appeals’ decision in BSDL is directly relevant to DRC’s pending motion, the Court, on its own initiative, ordered the parties to submit supplemental briefing, which now is complete. Upon consideration of the parties’ papers, the relevant legal authorities, and the entire record in this case, the Court will grant DRC’s motion to lift the stay, will vacate the Court’s March 28, 2011 Order imposing a stay on this case in its entirety, will deny as moot DRC’s alternative request for security, and will order supplemental [3] briefing.1

I. BACKGROUND

The Court previously has described the background of this case. See DRC, Inc. v. Republic of Honduras, 774 F.Supp.2d 66, 67-71 (D.D.C.2011); see also Memorandum Op. & Order at 1-3, Jan. 17, 2012 [Dkt. No. 88]. It therefore will limit its discussion accordingly.

This is an action to enforce a foreign arbitration award rendered in the Republic of Honduras by Honduran arbitrators under Honduran law. The underlying dispute in this ease arises out of a construction contract between DRC and the Fondo Hondureno de Inversión Social (“FHIS”) — an instrumentality of the Republic of Honduras — under which DRC agreed to construct certain water and wastewater sub-projects in Honduras. DRC demanded arbitration with FHIS, and ultimately an arbitration award was rendered against FHIS on September 8, 2009 that required FHIS to pay DRC over $51 million. On January 5, 2010, DRC filed a petition in this Court for confirmation of that arbitration award against the Republic of Honduras.

On March 28, 2011, the Court granted the Republic’s motion to stay this case and concluded that it would postpone ruling on DRC’s petition in view of the pendency of a prior, parallel action brought by DRC in Honduras before the Honduran Supreme Court. See DRC, Inc. v. Republic of Honduras, 774 F.Supp.2d at 68. The Court therefore stayed this case in its entirety pending further order of the Court; ordered the parties to file joint status reports with the Court every 60 days; and ordered that if either side learned of additional information that would warrant lifting the stay, such information should be filed promptly with the Court. See Order at 1, Mar. 28, 2011 [Dkt. No. 67],

As the Court made clear in its March 28, 2011 Opinion, it stayed this case only pursuant to its authority under Article VI of the Inter-American Convention on International Commercial Arbitration (“Inter-American Convention”). DRC, Inc. v. Republic of Honduras, 774 F.Supp.2d at 73; see id. at 73 n.5 (noting that the Court “does not herein decide — and therefore reserves ruling on (should such ruling become necessary) — whether this action should also be stayed until after final adjudication of the [False Claims Act] Action [4] and the Claims Court action”). Article VI of the Inter-American Convention provides:

If the competent authority [of the State in which, or according to the law of which, the arbitral decision has been made] has been requested to annul or suspend the arbitral decision, the authority before which such decision is invoked may, if it deems it appropriate, postpone a decision on the execution of the arbitral decision and, at the request of the party requesting execution, may also instruct the other party to provide appropriate guaranties.

Inter-American Convention, Jan. 30, 1975, S. Treaty Doc. No. 97-12 (1981), 1438 U.N.T.S. 248. As the Court stated in its March 28, 2011 Opinion, at the time of the Court’s decision on the Republic’s motion to stay, the United States Court of Appeals for the District of Case l:10-cv00003-PLF Document 100 Filed 06/11/12 Page 4 of 12 Columbia Circuit had not yet had occasion to offer much guidance on the manner in which a district court should “postpone” an action brought under the Inter-American Convention. DRC, Inc. v. Republic of Honduras, 774, F.Supp.2d at 73. That is no longer the case.

On January 13, 2012, the court of appeals in BSDL considered an appeal of a district court order staying a proceeding to confirm and enforce a foreign arbitration award pending the outcome of related litigation in Belize. See BSDL, 668 F.3d at 727. The court of appeals clarified the standard under which a district court has authority to stay an enforcement action and concluded in that ease “that the stay order as issued exceeded the proper exercise of authority of the district court[.]” Id. That decision now is the law of the D.C. Circuit.2

DRC argues in its supplemental briefing that BSDL requires that the Court lift the stay imposed in this case. See DRC Supp. Brief at 6. The Republic, in contrast, argues that BSDL actually “supports the continued stay of this action[.]” Republic Supp. Brief at 1. The Court agrees with DRC and concludes that the court of appeals’ decision in BSDL requires that the Court lift the stay.

II. DISCUSSION

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DRC, Inc. v. Republic of Honduras, 999 F. Supp. 2d 1, 2012 WL 10057466, 2012 U.S. Dist. LEXIS 189641 (D.D.C. 2012).

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