Koch Minerals Sarl v. Bolivarian Republic of Venezuela

• Court: District Court, District of Columbia
• Decided: August 18, 2021
• Docket: Civil Action No. 2017-2559
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

KOCH MINERALS SÀRL, et al.,

Plaintiffs, v. Civil Action No. 17-cv-2559-ZMF BOLIVARIAN REPUBLIC OF VENEZUELA,

Defendant.

MEMORANDUM OPINION & ORDER

Plaintiffs, Koch Minerals Sàrl (“Koch Minerals”) and Koch Nitrogen International Sàrl

(“Koch Nitrogen”), filed this suit against Defendant, the Bolivarian Republic of Venezuela

(“Venezuela”), seeking recognition of and judgment on an arbitral award issued by the

International Centre for Settlement of Investment Disputes (“ICSID”). See ECF No. 7 (Am.

Compl.), ¶¶ 1, 8. After Venezuela made a late appearance in this litigation, the Court granted

Venezuela’s Motion to Set Aside Default but denied its Motion to Dismiss, finding that Venezuela

was properly served and that the matter was properly before a magistrate judge pursuant to 28

U.S.C. § 636(c)(1). See Koch Minerals Sàrl v. Bolivarian Republic of Venezuela, 514 F. Supp. 3d

20 (D.D.C. 2020), reconsideration denied sub nom. Sàrl v. Bolivarian Republic of Venezuela, No.

17-cv-2559, 2021 WL 3556565 (D.D.C. Feb. 22, 2021). Plaintiffs now move for summary

judgment. See ECF No. 52 (Pls.’ Mot. Summ. J.). For the reasons discussed herein, the Court

GRANTS Plaintiffs’ Motion for Summary Judgment and confirms the ICSID Award.

1 I. Background

The parties’ dispute arose on October 10, 2010, when then-President of Venezuela, Hugo

Chavez, took control of FertiNitro—a company in which both Plaintiffs, Koch Minerals and Koch

Nitrogen, had financial interests. See Am. Compl., ¶ 13; id., Ex. 1 (Int’l Ctr. for Settlement of

Investment Disputes Award), ¶¶ 5.1, 5.4 (“ICSID Award”). Plaintiffs claimed that, by taking

control of FertiNitro, the Venezuelan government expropriated Koch Mineral’s 25% equity

interest in the company and interfered with an existing contract between the company and Koch

Nitrogen. See id., ¶¶ 5.1, 5.4, 5.60. Plaintiffs further claimed that they never received any

compensation for the expropriation of FertiNitro’s assets. See id., ¶¶ 5.4, 7.4, 7.5.

Attempting to resolve these disputes, Plaintiffs filed a request for arbitration under the

Convention on the Settlement of Investment Disputes Between States and Nationals of Other

States (the “ICSID Convention”). See id., ¶ 5.73. That Convention created the ICSID to “provide

facilities for conciliation and arbitration of investment disputes between Contracting States and

nationals of other Contracting States.” ICSID Convention art. 1, Aug. 27, 1965, 17 U.S.T. 1270,

575 U.N.T.S. 159. After completing arbitration, the ICSID found that Venezuela was liable and

awarded Koch Minerals $140.25 million and Koch Nitrogen $184.8 million. See ICSID Award,

¶¶ 10.3, 12.3, 12.4. The arbitrators later modified Koch Nitrogen’s award, reducing it from $184.8

million to $166.7 million, see Am. Compl., Ex. 2 (ICSID Rectification Award), ¶ 74, prompting

Plaintiffs to amend their complaint, see Am. Compl., ¶ 26. The awards also included pre- and

post-award interest and legal costs. See ICSID Award, ¶¶ 12.3–12.8.

After the ICSID issued its decision, Plaintiffs filed this suit seeking to enforce the award

under 22 U.S.C. § 1650a(a). See Pls.’ Mot. Summ. J. at 4. After Plaintiffs filed this action but

before making an appearance, Venezuela petitioned the ICSID to annul the Arbitration Award.

2 See ECF No. 25 (Pls.’ Mot. for Default J.), Ex. 3 (ICSID Annulment Procedural Order No. 1), ¶ 1.

By applying to annul the award, Venezuela triggered an automatic, provisional stay that prevented

the parties from enforcing the award until the annulment dispute was settled. See id., ¶ 3; ECF

No. 43 (Joint Status Report, Nov. 6, 2020), Ex. 1 (ICSID Case Details) at 9; ECF No. 30 (Def.’s

Mot. Set Aside Default & MTD) at 8. That stay, however, was lifted on April 1, 2019, after

Venezuela failed to post the required security. See ICSID Annulment Procedural Order No. 1,

¶¶ 6, 8, 29, 32, 34. Still, the petition remained pending. Last year, the Court ordered the parties

to file a joint report regarding the current status of the proceedings. See Minute Order (Nov. 3,

2020). Although the ICSID has issued several new procedural orders since lifting the stay in April

2019, neither party attached these orders to their joint report. See Joint Status Report (Nov. 6,

2020); ICSID Case Details at 10. In fact, Venezuela maintains that it has “no knowledge of the

annulment proceedings.” Joint Status Report (Nov. 6, 2020) at 2. Since that time, the annulment

petition was briefed before a three-member ICSID panel, and the panel held a hearing on June 17

and 18, 2021. See World Bank, Case Details: Koch Minerals Sàrl & Koch Nitrogen International

Sàrl v. Bolivarian Republic of Venezuela (ICSID Case No, ARB/11/19),

https://icsid.worldbank.org/cases/case-database/case-detail?CaseNo=ARB/11/19.

II. Legal Standard

To succeed on a motion for summary judgment, the moving party must show that “there is

no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of

law.” Fed. R. Civ. P. 56(a). A fact is material if it “might affect the outcome of the suit under

governing law,” and a dispute is genuine “if the evidence is such that a reasonable jury could return

a verdict for the nonmoving party.” Steele v. Schafer, 535 F.3d 689, 692 (D.C. Cir. 2008)

(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The moving party bears the

3 initial burden of demonstrating that there is no genuine dispute of material fact. See Celotex Corp.

v. Catrett, 477 U.S. 317, 323 (1986). If the moving party meets this burden, the nonmoving party

must identify “specific facts showing that there is a genuine issue for trial.” Id. at 324 (quoting

Fed. R. Civ. P. 56(e)).

In evaluating motions for summary judgment, the Court must review all evidence in the

light most favorable to the nonmoving party and draw all inferences in the nonmoving party’s

favor. See Tolan v. Cotton, 572 U.S. 650, 655–56 (2014) (per curiam). In doing so, the Court

must not assess credibility or weigh the evidence. See Barnett v. PA Consulting Grp., Inc., 715

F.3d 354, 358 (D.C. Cir. 2013). However, the nonmoving party must provide more than mere

unsupported allegations, and a genuine issue for trial must be supported by affidavits, declarations,

or other competent evidence. See Fed. R. Civ. P. 56(c). If the nonmoving party’s evidence is

“merely colorable” or “not significantly probative,” summary judgment may be granted. Liberty

Lobby, 477 U.S. at 249–50.

“Summary Judgment to confirm and enforce an ICSID arbitration award should be granted

where the party seeking recognition or enforcement provides a copy of the award to the relevant

court . . . and where there are no defenses to enforcement.” Saint-Gobain Performance Plastics

Europe v. Bolivarian Republic of Venezuela, No. 21-cv-129, 2021 WL 326079, at *4 (D.D.C. Feb.

1, 2021) (citing ICSID Convention art. 54(2); TECO Guatemala Holdings, LLC v. Republic of

Guatemala, 414 F. Supp. 3d 94, 101 (D.D.C. 2019)). “This is because courts have an

‘exceptionally limited’ role in enforcing ICSID arbitral awards.” Id. (quoting TECO, 414 F. Supp.

3d at 101).

4 III. Analysis

“ICSID is not empowered to enforce awards[,] . . . [i]nstead, prevailing parties must

register their awards with a court of a member state.” TECO Guatemala Holdings, LLC v. Republic

of Guatemala, No. 17-cv-102, 2018 WL 4705794, at *2 (D.D.C. Sept. 30, 2018). Under the ICSID

Convention, a member state’s courts must “recognize an award . . . as binding and enforce the

pecuniary obligations imposed by that award within its territories as if it were a final judgment of

a court in that [s]tate.” ICSID Convention art. 54.

The ICSID Convention’s enabling statute makes clear that, in an enforcement proceeding,

courts may not reconsider the propriety of an ICSID award:

An award of an arbitral tribunal rendered pursuant to chapter IV of the [ICSID C]onvention shall create a right arising under a treaty of the United States. The pecuniary obligations imposed by such an award shall be enforced and shall be given the same full faith and credit as if the award were a final judgment of a court of general jurisdiction of one of the several States.

22 U.S.C. § 1650a(a) (emphasis added). Moreover, the Federal Arbitration Act (“FAA”)—which

guides judicial review of certain kinds of arbitral awards—does not provide grounds for vacating

an ICSID award. See id. (“The [FAA] shall not apply to enforcement of awards rendered pursuant

to the [ICSID C]onvention.”). Thus, a member state’s court is “not permitted to examine an ICSID

award’s merits, its compliance with international law, or the ICSID tribunal’s jurisdiction to render

the award; all it may do is examine the judgment’s authenticity and enforce the obligations

imposed by the award.” OI European Grp. B.V. v. Bolivarian Republic of Venezuela, No. 16-cv-

1533, 2019 WL 2185040, at *4 (D.D.C. May 21, 2019) (quoting TECO, 2018 WL 4705794, at *2)

(cleaned up).

Venezuela has presented no grounds to contest the authenticity of the ICSID Award. See

generally ECF No. 53 (Def.’s Opp’n). Nor has it raised any concerns about the ICSID Award’s

5 finality in light of the annulment proceedings. See id. at 1–3; see also Koch Minerals Sàrl v.

Bolivarian Republic of Venezuela, 514 F. Supp. 3d 20 (D.D.C. 2020) (addressing pending

annulment proceedings). But, as the ICSID panel lifted the stay of enforcement, this poses no

impediment to entering a judgment enforcing the award. Rather, Venezuela’s two-page

Opposition was limited to asking Plaintiffs to clarify the interest rates and calculations, see id. at

2, which Plaintiffs did, see ECF No. 54 (Pls.’ Reply), Ex. 1 (Schedule of Amounts Owed).

Venezuela pointed out—and Plaintiffs have not disputed—that the interest rates set out in the

ICSID Award will apply post-award (but pre-judgment), whereas the federal statutory interest rate

will apply post-judgment. See Def.’s Opp’n at 1–2; Pls.’ Reply at 23; Tenaris S.A. v. Bolivarian

Republic of Venezuela, No. 18-cv-1371, 2020 WL 3265476, at *2 (D.D.C. June 17, 2020). Having

no further arguments to consider, the Court will enter judgment in favor of Plaintiffs and confirm

the ICSID Award. See OI European Grp., 2019 WL 2185040, at *5.

IV. Conclusion

For these reasons, the Court will enter judgment for Plaintiffs and confirm the ICSID

Award. Plaintiffs are entitled to the sum of:1

• To Koch Minerals:

o The principal amount: $140,250,000;

o Pre-award interest from October 11, 2010 to October 30, 2017, calculated at the

US$ Libor 6-month rate plus 2%, compounded every six months:

$28,419,011.14; and

1 The total awards are pulled from Plaintiffs’ Motion for Summary Judgment, and Venezuela has not contested these amounts. See Def.’s Opp’n 1–3; Pls.’ Mot. Summ. J. at 10–11; Pls.’ Reply at 2–3. 6 o Post-award interest from October 30, 2017, to the date of this Court’s entry of

judgment at a rate of US$ Libor 6-month rate plus 2%, compounded every six

months. See Schedule of Amounts Owed at 24.

• To Koch Nitrogen:

o The principal amount: $166,700,000;

o Pre-award interest from October 11, 2010 to October 30, 2017, calculated at the

$33,778,603.62; and

o Post-award interest from October 30, 2017, to the date of this Court’s entry of

judgment at a rate of US$ Libor 6-month rate plus 2%, compounded every six

• Jointly, to Plaintiffs:

o Legal costs: $17,436,085.10;

o Arbitration costs: $628,836.435;

o Post-award interest on the foregoing legal and arbitration costs from October

30, 2017, to the date of this Court’s entry of judgment at a rate of US$ Libor 6-

month rate plus 2%, compounded every six months. See Schedule of Amounts

Owed at 24; and

o Post-judgment interest on the total amount of the award, calculated at the rate

set forth in 28 U.S.C. § 1961, from the date of judgment until full payment. 2021.08.18 10:15:36 -04'00' ___________________________________ ZIA M. FARUQUI UNITED STATES MAGISTRATE JUDGE