IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ...

Case 1:16-cv-01533-ABJ Document 45 Filed 04/09/18 Page 1 of 9

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

OI EUROPEAN GROUP B.V., Plaintiff, v. Case No. 1:16-cv-01533-ABJ BOLIVARIAN REPUBLIC OF VENEZUELA, Defendant.

[PROPOSED] PLAINTIFF’S MOTION TO MODIFY THE STAY OF THIS PROCEEDING Plaintiff OI European Group B.V. (“OIEG”) moves to modify the stay of the proceedings, and in support states the following: INTRODUCTION 1.

This case rests in a posture that may be analogized to that of a judgment

defendant in a civil action pursuing an appeal in the Court of Appeals. Defendant the Bolivarian Republic of Venezuela (“Republic”) lost the fact-finding round (analogous to “trial”) through an award of an ICSID tribunal three years ago. The Republic now pursues “annulment” in ICSID -the only award review the ICSID convention affords, analogous to appeal of a civil judgment.1 Since December, the Republic has enjoyed the benefit of a discretionary stay granted by this 1

The analogy is a loose one, because annulment presents a far narrower prospect of success for the Republic than would appeal of a civil judgment. The ICSID Convention recognizes only a limited scope for review of an ICSID award. See ICSIC Convention, art. 52 (“Either party may request annulment . . . on one or more of the following grounds: (a) that the Tribunal was not properly constituted; (b) that the Tribunal has manifestly exceeded its powers; (c) that there was corruption on the part of a member of the Tribunal; (d) that there has been a serious departure from a fundamental rule of procedure; or (e) that the award has failed to state the reasons on which it is based.”). It follows a fortiori that security that the appellant in a civil action would have to provide is equitably even more urgently warranted in the present circumstances. DB1/ 96676309.5


Court, but the Republic has posted no security. Were the Republic to appeal a judgment in a civil action, however, it would ordinarily have to post a bond. Fed. R. Civ. P. 62. The proposition of this motion is that the Court, applying the same discretion that led to the grant of the stay, should condition any further extension of the stay on the voluntary posting of a bond by the Republic. 2.

Over three years have passed since an ICSID tribunal issued its award in favor of

OIEG. The annulment application has been pending for nearly three years, hamstrung by the Republic’s regular pattern of attacking the bona fides of panel members and non-payment of mandated ICSID fees. The proceeding has no end in sight, and nothing protects OIEG against the risks of delay. 3.

The Republic has no right to a stay in this Court, and so nothing would prevent

the Court from vacating the stay that it earlier granted. This motion does not request that the Court order that a bond be posted, or indeed order that the Republic take any act. The relief sought is much narrower: OIEG respectfully requests that the Court modify the stay to be conditioned upon the voluntary posting of a bond by the Republic. In the event that the Republic does not volunteer a bond within 30 days, the Court should exercise its discretion to vacate the discretionary stay. BACKGROUND 4.

OIEG commenced the OIEG arbitration against the Republic on September 7,

2011. On March 10, 2015, an ICSID tribunal issued an award (the “OIEG Award”) in favor of OIEG in the amount of $372,461,982 (plus interest and legal costs), determining that the Republic had expropriated OIEG’s assets and failed to treat OIEG fairly and equitably in accordance with its obligations under the Netherlands-Venezuela Bilateral Investment Treaty.

DB1/ 96676309.5

2


5.

On July 7, 2015, the Republic filed a request with ICSID to annul the OIEG

Award and requested a stay of enforcement – ICSID denied the stay request on April 4, 2016. The Republic’s annulment application was based, in part, on the contention that a member of the arbitration panel was biased. The Republic’s annulment application generated the formation of a new ICSID committee to review the application (the “Annulment Committee”). 6.

On July 27, 2016, Plaintiff commenced this action, pursuant to 22 U.S.C. §1650a

and Article 54 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the “ICSID Convention”), to recognize the OIEG Award. [Dkt. No. 1]. After refusing to accept service of the complaint for over a year, the Republic filed its motion to dismiss or stay these proceedings on September 27, 2017. [Dkt. No. 23]. 7.

Exercising its discretionary power under Landis v. N. Am. Co., 299 U.S. 248, 254

(1936), this Court stayed this action on December 21, 2017 (“the Court is persuaded, in an exercise of its judgment, after weighing the competing interests involved, that the matter should be stayed”) (internal citations omitted). ARGUMENT A. Any Continued Stay Should Be Conditioned on the Posting of a Bond 8.

The OIEG Award establishes the rights of the parties, and it is entitled to

enforcement as though it were a judgment. See 22 U.S.C. § 1650a. This Court exercised a discretionary power to enter the stay in December, likening the case to “other more traditional judicial proceedings” such as a civil action in which judgment has entered by an appeal has commenced. See December 21, 2017, Minute Order. The Republic was seeking annulment, the only right of review afforded under ICSID procedures (analogous, for present purposes, to an appeal of a district court judgment to the court of appeals). Even when appealed, judgments are

DB1/ 96676309.5

3


fully enforceable unless a stay is granted, and a stay is ordinarily conditioned upon the posting of a supersedeas bond. Fed. R. Civ. P. 62(d); see Fed. Prescription Serv. Inc. v. Am. Pharm. Ass’n, 636 F.2d 755, 760-61 (D.C. Cir. 1980) (“Because the stay operates for the appellant’s benefit and deprives the appellee of the immediate benefits of his judgment, a full supersedeas bond should be the requirement in normal circumstances.”). In both contexts (an ICSID award and a U.S. District Court judgment), liability on the merits has been adjudicated. The posting of a bond by an appellant seeking to overturn a court judgment on appeal would serve the same purpose with respect to a party seeking to delay or annul an adverse arbitral award: “to secure the appellee from loss resulting from the stay of execution.” See Fed. Prescription, 636 F.2d at 760. The burden is on the party seeking an unsecured stay to show that the facts of the case at hand warrant a departure from the long-standing requirement that a stay pending review be conditioned upon the posting of a bond. See Althridge v. Rivas, 236 F.R.D. 6, 8-9 (D.D.C. 2006). A stay of the proceedings should be conditioned on the posting of a bond especially where it is reasonably likely that the debtor is unwilling to satisfy the judgment. See Fed. Prescription, 636 F.2d at 760. 9.

Neither the FSIA nor any other applicable statute or treaty gives the Republic any

right to a discretionary stay. What the Court, exercising its discretion under Landis, may give via stay, the Court has “inherent power and discretion” under Landis to modify or to vacate. See Marsh v. Johnson, 263 F.Supp.2d 49, 52 (D.D.C. 2003). 10. •

The Republic’s approach has always been one of delay:

The Republic refused to accept service of the complaint in this proceeding for over a year.

DB1/ 96676309.5

4


•

On the same day that oral argument concluded in front of the Annulment Committee, the Republic filed a motion to dismiss or stay this proceeding, ignoring ICSID Convention rules. See ICSID Convention, art. 53 (an “award shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in this Convention”).

•

As soon as briefing on the motion to dismiss or stay was closed here, the Republic filed an application to disqualify a member of the Annulment Committee which automatically suspended the annulment proceedings. See Joint February 2, 2018 Status Report at 2 [Dkt. No. 40]. The disqualification application was ultimately denied in March 2018 after delaying the annulment proceedings for over three months. See Joint March 12, 2018 Status Report at 2 [Dkt. No. 41].

•

The Republic twice manipulated the annulment proceeding by refusing to pay the costs of its own proceedings as required by ICSID rules. See Joint February 2, 2018 Status Report at 4-5 [Dkt. No. 40]. Ultimately, OIEG paid the amounts outstanding to ICSID in order to prevent Venezuela’s most recent non-payment from leading to a new suspension of the annulment proceedings.2 See Joint March 12, 2018 Status Report at 1-2 [Dkt. No. 41]. 11.

The Republic has posted no bond with respect to the OIEG Award. And it has

acted at every turn to delay the resolution of its annulment proceeding and the proceedings in front of this Court. 12.

Thus it is appropriate for the Court to condition any further extension of the stay

on the voluntary posting of a supersedeas bond, in the amount of the OIEG Award. A bond 2

The annulment proceedings were already suspended once in 2016 when the Republic did not timely pay its bills. See id. at 5. DB1/ 96676309.5

5


would protect OIEG against the consequences of delay; while its absence exposes OIEG to an enhanced inability to enforce its judgment in an increasingly unsettled environment within the Republic.3 B. The Stay Should Be Terminated if the Republic Opts Not to Post a Bond Within 30 Days 13.

This motion does not request that the Court order the Republic to post a bond. No

question of the Court’s power to do so would be raised. Rather, OIEG requests that the Court afford the Republic 30 days to post such a bond voluntarily and, if the Republic does not do so, that the Court consider that election, and all of the other relevant facts and circumstances set out in the motion, as facts warranting the exercise of the Court’s discretion to terminate its discretionary stay. 14.

A court may not “order[] a stay ‘of indefinite duration in the absence of a pressing

need.’” Belize Soc. Dev. Ltd. v. Gov’t of Belize, 668 F.3d 724, 731 (D.C. Cir. 2012) (quoting Landis, 299 U.S. at 255); see GFL Advantage Fund, Ltd. v. Colkitt, 216 F.R.D. 189, 193 (D.D.C. 2003) (“The right to proceed in court should not be denied except under the most extreme circumstances.”); see also National Industries for Blind v. Department of Veterans Affairs, 2017 WL 5176326 at *4 (D.D.C. Nov. 7, 2017) (“a stay is not a matter of right, even if irreparable injury might otherwise result”). In exercising its discretion, courts must “weigh competing interests and maintain an even balance,” and this “discretion [is] abused if the stay [is] not kept within the bounds of moderation.” Landis, 299 U.S. at 255-56. As Landis puts it, “[w]hen [reasonable] limits have been reached, the fetters should fall off.” Id. at 257.

3

As another court in this District recently found, there is “some likelihood that Venezuela will be either unwilling or unable to satisfy the full judgment . . . .” Crystallex Int’l Corp. v. Bolivarian Republic of Venezuela, No. 16-00661 (Aug. 8, 2017) [Dkt. No. 44]. DB1/ 96676309.5

6


15.

The Court of Appeals found a request for stay “sufficiently indefinite to require a

finding of a pressing need under Landis” where “the record fail[ed] to show either what a ‘resolution’ of [the parallel] case would entail or when such a resolution [wa]s likely to be reached.” Belize, 668 F.3d at 732. Despite the effort to inform the Court of new developments in the annulment proceedings, there appears to be no ascertainable end date to the annulment proceedings, thus the stay has become immoderate. See Landis, 299 U.S. at 257; see also Ortega Trujilo v. Conover & Co. Communications, 221 F.3d 1262, 1264 n.3 (11th Cir. 2000) (“requirement of status reports does not guarantee that the district court will reassess the propriety of the stay”). 16.

The Republic has established no pressing need for this Court to delay carrying out

the mandate of federal law, which is to treat the OIEG Award “rendered pursuant to chapter IV of the [ICSID] convention” as “a right arising under a treaty of the United States.” 22 U.S.C. § 1650a. WHEREFORE, for the foregoing reasons, OIEG respectfully requests that the Court modify the stay to be conditioned upon the voluntary posting of a bond by the Republic. In the event that the Republic does not volunteer a bond within 30 days, the Court should exercise its discretion to vacate the stay. CERTIFICATION UNDER LOCAL RULE 7(m) Pursuant to Local Civil Rule 7(m), Plaintiff’s counsel conferred with the Republic’s counsel regarding this motion on April 6, 2018, and the Republic’s counsel advised that the Republic will oppose this motion.

DB1/ 96676309.5

7


Dated: _________, 2018

Respectfully submitted, MORGAN, LEWIS & BOCKIUS LLP

Susan Baker Manning, Bar No. 499635 [email protected] 1111 Pennsylvania Avenue, NW Washington, DC 20004 Telephone: +1.202.739.3000 Facsimile: +1.202.739.3001 and Sabin Willett (pro hac vice) [email protected] Christopher L. Carter (pro hac vice) [email protected] One Federal Street Boston, MA 02110-1726 Telephone: +1.617.341.7700 Facsimile: +1.617.341.7701 Attorneys for Plaintiff OI European Group B.V.

DB1/ 96676309.5

8


IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA OI EUROPEAN GROUP B.V., Plaintiff,

Civil Action No. 1:16-cv-01533-ABJ

v. BOLIVARIAN REPUBLIC OF VENEZUELA, Defendant.

[PROPOSED] ORDER GRANTING PLAINTIFF’S MOTION TO MODIFY THE STAY OF THIS PROCEEDING Upon review and consideration of Plaintiff’s Motion to Modify the Stay of this Proceeding, Defendant’s response thereto, and the entire record in this case, it is: ORDERED that Plaintiff’s Motion to Modify the Stay of This Proceeding is hereby GRANTED; ORDERED that the December 21, 2017, discretionary stay of this proceeding shall terminate thirty days after the issuance of this Order; ORDERED that in the event that Defendant posts a bond in the amount of the OIEG Award within thirty days of the issuance of this Order, the December 21, 2017, discretionary stay of this proceeding shall remain in effect pending further order of this Court. IT IS SO ORDERED. Dated: ________________

Amy Berman Jackson United States District Judge

DB1/ 96954554.2