Science Applications International Corporation v. Hellenic Republic

• Court: District Court, District of Columbia
• Decided: January 5, 2017
• Docket: Civil Action No. 2013-1070
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

In The Matter of the Arbitration of Certain Controversies Between

SCIENCE APPLICATIONS INTERNATIONAL CORP., Civil Action No. 13-cv-1070(GK) Petitioner,

and

THE HELLENIC REPUBLIC,

Respondent.

MEMORANDUM OPINION

On July 12, 2013, Petitioner Science Applications

International Corporation ("Petitioner" or "SAIC"), now "Leidos,

Inc.," filed a Petition to Confirm Arbitration Award ("Petition")

[Dkt. No. 1] against Respondent, The Hellenic Republic

("Respondent" or "Hellenic Republic") . The Petitioner now asks

this Court to confirm an arbitration award granted by the

International Chamber of Commerce International Court of

Arbitration ("ICC") and to enter judgment against the Hellenic

Republic ..

I. BACKGROUND

On September 5, 2013, while the Petition with this Court was

pending, the Hellenic Republic filed an action to set aside the

ICC award in the Athens Court of Appeals. See Pet.'s Motion to Confirm Arbitration Award and to Enter Judgment at 2-3 [Dkt. No.

20]. On March 27, 2014, the Parties filed a Joint Motion for a

Stay pending a decision by the Athens Court of Appeals [Dkt. No.

16], which was granted on March 28, 2014 [Dkt. No. 17]. On June

18, 2014, the Athens Court of Appeals issued a decision annulling

the ICC award. See Consent Motion for Briefing Schedule [Dkt. No.

18]. On September 8, 2014, Petitioner filed a Motion to Confirm

the Arbitration Award and Enter Judgment [Dkt. No. 20]. On November

17, 2014, Respondent filed a Cross-Motion to Dismiss or to Deny

Petition to Confirm Award [Dkt. No. 25].

On January 9, 2015, Petitioner filed an appeal of the Athens

Court of Appeals annulment decision with the Supreme Court of the

Hellenic Republic ("the Greek Supreme Court"). As of November 6,

2015, the Parties had not received any decision by the Greek

Supreme Court. Thereafter, the Parties filed Joint Status Reports

on the proceedings before the Greek Supreme Court, until it issued

a decision.

On November 2, 2016, the Parties filed a Joint Status Report

notifying this Court of the September 22, 2016, decision of the

Greek Supreme Court [Dkt. No. 48]. It ruled in favor of Petitioner

LEIDOS, Inc. (formerly, Science Applications International

Corporation} reversing the Athens Court of Appeals decision

annulling the arbitration award, and thereby reinstating the

original ICC award to Petitioner. In addition, the Greek Supreme

2 Court remanded the case back to the Athens Court of Appeals for a

new hearing to address only one rather minor issue discussed in

the Supreme Court's decision. That hearing is now scheduled for

November 16, 2017.

In response to the November 2, 2016 Joint Status Report, the

Court Ordered the Parties to submit their positions as to what, if

anything, this Court should do, given the fact that the Greek

Supreme Court had ruled [Dkt. No. 49] . On December 16, 2016,

Petitioner submitted a Position Brief as to Impact on Its

Arbitration Award Enforcement Petition of Supreme Court of the

Hellenic Republic's Decision ("Pet. 's Position Br.") [Dkt. No. 51] .

Respondent submitted its Position Statement that this Court should

deny the Petitioner's request for enforcement of the decision of

the Greek Supreme Court. [Dkt. No. 52].

II. STANDARD OF REVIEW

Under the New York Convention, which has been implemented by

the Federal Arbitration Act, 9 u.s.c. § 201 et. ~' a court "may,

if it considers it proper, adjourn the decision on the enforcement

of the award. , " New York Convention Article VI (emphasis

added), and stay proceedings where "a parallel proceeding is

ongoing in the originating country and there is a possibility that

the award will be set aside." Europcar Italia v. Maiellano Tours,

Inc., 156 F.3d 310, 316-18 (2d Cir. 1998). But, of course, the

court is not required to do so. See id.

3 In determining whether to enforce an Arbitration Award

against a foreign state, this Court must balance the factors which

weigh in favor of or against enforcement. Chevron Corp. and Texas

Petroleum Company v. Republic of Ecuador, 949 F. Supp. 2d 57, 71-

73 (D.D.C. 2013) (applying Europcar, 156 F.3d at 316-18).

In Europcar, the Second Circuit cautioned courts that "[a]

stay of confirmation should not be lightly granted lest it

encourage abusive tactics by the party that lost in arbitration."

Europcar, 156 F.3d at 316-18. In order to aid judges as they

exercise their discretion, the Second Circuit enumerated a number

of factors that should be considered. They are:

" ( 1) the general objectives of arbi trg.tion-the expeditious resolution of disputes and the avoidance of protracted and expensive litigation;

(2) the status of foreign proceedings and the estimated time for those proceedings to be resolved;

(3) whether the award sought to be enforced will receive greater scrutiny in the foreign proceedings under a less deferential standard of review;

(4) the characteristics of the foreign proceedings including (i) whether they were brought to enforce an award (which would tend to weigh in favor of a stay) or to set the award aside (which would tend to weigh in favor of enforcement); (ii) whether they were initiated before the underlying enforcement proceeding so as to raise concerns of international comity; (iii) whether they were initiated by the party now seeking to enforce the award in federal court; and (iv) whether they were initiated under circumstances indicating an intent to hinder or delay resolution of the dispute;

( 5) a balance of the possible hardships to each of the parties, keeping in mind that if enforcement is postponed under Article VI of the Convention, the party seeking enforcement may receive "suitable security" and that, under Article V of the

4 Convention, an award should not be enforced if it is set aside or suspended in the originating country. ., and

( 6) any other circumstances that could tend to shift the balance in favor of or against adjournment."

Europcar, 156 F.3d at 317-18.

III. ANALYSIS

A. Factors One and Two

Factor One focuses on "the general objectives of arbitration-

and the avoidance of protracted and expensive litigation."

Europcar, 156 F.3d at 317. Factor Two focuses on "the status of

the foreign proceedings and the estimated time for those

proceedings to be resolved." Id. Given the fact that these two

factors are so closely related, the Court will examine them

together.

Stays are undesirable because "the adjournment of enforcement

proceedings impedes the goals of arbitration - the expeditious

resolution of disputes and the avoidance of protracted and

expensive litigation." Id. It is clear that granting a stay in

this case would thwart those fundamental objectives. The dispute

between these two parties has now lasted almost 13 years. See

Petition~ 14. The Petitioner, LEIDOS, filed its most recent demand

for arbitration in June 2009 - seven and a half years ago. Petition

~21. Petitioner filed a previous arbitration demand in 2006.

Petition ~ 14. The ICC tribunal issued its opinion in 2013. And,

5 finally, Petitioner predicts that it will take the Athens Court of

Appeals and the Greek Supreme Court until at least 2020 to bring

the case to an absolute end. In sum, it will have taken-at a

minimum-at least eleven years for the Petitioner to obtain the

fruits of this specific litigation.

The Petitioner argues that "[g]ranting a stay in this case

would thwart the objectives of arbitration." Pet.'s Position Br.

at 7. The Court agrees. In fact, there can be little disagreement

on this issue. As Petitioner has made clear, this dispute has

already lasted almost 13 years and may .well last, at a minimum,

until 2020. If that prediction is accurate-and there have been

many past road blocks and continuances in this litigation-it would

mean that the litigation may last for well over 15 years.

Courts have found that the first and second factors weighed

in favor of enforcement in cases involving far shorter litigation

time periods. For example, in G.E. Transp.S.P.A. v. Republic of

Albania, 693 F. Supp.2d 132, 139 (D.D.C.2010), this Court concluded

that only four years from the time a complex case was in

arbitration sufficed to "plainly weigh in favor of confirmation

rather than adjournment." Id. This Court ruled similarly in Chevron

Corp. and Texas Petroleum Company v. Republic of Ecuador, 949 F.

Supp. 2d 57, 72 (D.D.C. 2013), because the case had been submitted

to arbitration over six years earlier. The Court held that further

delay would "surely . . . not constitute 'expeditious resolution'

6 of the dispute which originated [more than a decade earlier] . "

Id.; see also Gold Reserve, Inc. v. Bolivarian Republic of

Venezuela, 146 F. Supp. 3d 112, 135 (D.D.C. 2015), appeal docketed,

No. 15-7158 (D.C. Cir., Dec. 30, 2015) (holding that the first

factor certainly favored enforcement rather than a stay of

proceedings when a petitioner had filed for arbitration more than

six years earlier) .

Moving to the Second Factor, "the status of foreign

proceedings and estimated time for those proceedings to be

resolved," it must be remembered that although the Greek Supreme

Court reversed the set aside and reinstated the award, years still

remain to fully litigate the one minor issue that remains. When

foreign proceedings are not likely to be reversed in the near

future, Courts have concluded that the second factor weighs against

a stay of enforcement. See Chevron Corp., 949 F. Supp. 2d at 72.

For all these reasons, the Court concludes that there is no

question that Factors One and Two weigh strongly in favor of

granting the Petitioner's request for enforcement of the

arbitration award, which was upheld by the Greek Supreme Court.

B. Factor Three

Factor Three focuses on whether the award requested will be

judged in the foreign proceedings under a different and less

differential standard of review. Europcar, 156 F.3d at 317.

7 Regarding whether the Respondent's right to be heard will be

reviewed with a differential standard, Petitioner argues that the

Respondent will be unable to satisfy its burden of showing that

the "standard is not so much more exacting than the one applied

here." See Chevron Corp., 949 F. Supp. 2d at 72. There is nothing

to suggest that a differential standard will be used, nor does

Respondent refer to any change in the standard of review.

C. Factor Four

Factor Four raises a number of questions. First, item (i)· of

Factor Four asks "whether [the foreign proceedings] . were

brought to enforce an award (which would tend to weigh in favor of

the stay] or to set the award aside (which would tend to weigh in

favor of enforcement)." The answer to that question is very simple

and that is that the Respondent initiated the foreign proceedings

to vacate the initial ICC Award. This clearly weighs in favor of

enforcement.

Item (ii) of Factor Four questions whether the foreign

proceedings were initiated before the underlying enforcement

proceeding. Again, the answer is very simple, and that is they

were not initiated before the underlying enforcement proceeding

and, therefore, there needs to be no concern about international

comity.

Item (iii) of Factor Four asks whether the foreign proceedings

were initiated by the Party now seeking to enforce the award in

8 federal court. The answer is simple, namely, that they were not

initiated by the Party now seeking to enforce the award.

Respondent, not Petitioner, initiated the foreign proceedings;

thus, this factors weighs in favor of enforcement as well. See

Gold Reserve Inc., 146 F. Supp. 3d at 136.

Item (iv) of Factor Four asks whether the foreign proceedings

were initiated under circumstances indicating an intent to hinder

or delay resolution of the dispute. While the Petitioner does at

one point suggest such an intent on the part of Respondent, the

Court does not have sufficient information to provide an answer.

Overall, Factor Four clearly weighs in favor of enforcement.

D. Factors Five and Six

Factors Five and Six may be viewed as residual factors- they

direct the Court to consider "a balance of the possible hardships

to the Parties," and if there is " [a] ny other circumstance that

could tend to shift the balance in favor of or against

adjournment," respectively. Europcar, 156 F.3d at 318. While there

is little information given by the Parties about Factor Five, it

is certainly clear that the Respondent, the Hellenic Republic,

will not have to endure possible hardship given the fact that it

is a country with a treasury and all the resources that a

government has, whereas, the Petitioner is a private firm that may

well suffer hardship for not gaining access to the substantial

amount of money awarded by the Hellenic Supreme Court.

9 Neither party has presented any other factors that this court

should consider under Factor Six.

IV. CONCLUSION

All of the issues covered by the Factors laid out in Europcar

are overwhelmingly in favor of the Petitioner. Significantly, the

Respondent has not been able to counter any of the reasons given

to show that the Petitioner is clearly entitled to prevail.

For all the reasons given, the Court concludes that the

Petitioner's Petition to Enforce the Award of the Hellenic

Republic should be granted. An Order shall accompany this

Memorandum Opinion.

January 5, 2017 Gl~~~!~ United States District Judge

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