Belize Bank Ltd. v. Gov’t of Belize, No. 14-cv-659 (D.D.C., 2016), is one of several recent cases in which the District Court for the District of Columbia ordered the Government of Belize (“Belize”) to pay an arbitration award. In this case, the Court addressed questions of when federal courts can enforce arbitration awards granted outside the U.S. For a fuller discussion of where arbitral awards can be enforced, see the discussion of “Enforcement and Recognition of Arbitral Awards” in our e-book, International Practice: Topics and Trends.
In 2007, The Belize Bank Limited (“Bank”) initiated arbitration proceedings at the London Court of International Arbitration (“LCIA”) against Belize, who failed to pay the Bank debts originating from a loan payment guarantee signed by then Belizean Prime Minister Said Musa. Because Belize did not initially participate in the proceeding, the LCIA appointed an arbitrator, Zachary Douglas, on behalf of Belize. In 2013, the LCIA ordered Belize to pay the Bank BZ$36,895,509.46 plus interest. In 2014, the Bank filed a petition to enforce the 2013 award in the District of Columbia. Belize moved to dismiss the petition.
The district court denied the motion to dismiss and granted the Bank’s petition. Belize based its motion to dismiss on four familiar grounds: “(1) the court lacks subject matter jurisdiction because Belize has foreign sovereign immunity under the Foreign Sovereign Immunities Act; (2) dismissal is appropriate under the doctrine of forum non conveniens; (3) the court lacks personal jurisdiction over Belize; and (4) dismissal is warranted on grounds of international comity.” The Court held that these four arguments are foreclosed by earlier cases: BCB Holdings Ltd. V. Gov’t of Belize, No. 14-1123 (D.D.C., 2015) and Belize Soc. Dev., Ltd. V. Gov’t of Belize, No. 10-7167 (App. D.C., 2012).
First, the Court stated that it had subject matter jurisdiction under the New York Convention, because this arbitration award arises from a commercial transaction, and the award was granted in the U.K., a party to the Convention.
Next, Belize contended that the Court should not confirm the arbitration award based on the New York Convention. Belize argued that “(1) the composition of the arbitral panel was not in accordance with the parties’ agreement; (2) recognition of the award would be contrary to the public policy of the United States; (3) the arbitration did not meet the minimum requirements of due process; (4) the underlying agreements are invalid under the laws of Belize; and (5) Belize is not a party to the New York Convention.”
The Court rejected Belize’s argument that “the arbitral panel was not selected in accordance with the parties’ agreement and the LCIA Rules.” Belize asserted that the arbitrator Douglas had a conflict of interest, because Douglas is a member of Matrix Chambers, a British barrister’s chambers, whose member had represented interests adverse to Belize in prior litigation and had represented the Bank’s interest. The Court upheld the LCIA’s rejection of Belize’s demand that Douglas make disclosures about Matrix Chambers and be removed. It stated:
Barristers in an English chamber are independent practitioners. Therefore, for conflicts purposes, Article 5.3 of the LCIA Rules did not require Douglas to disclose the potentially conflicting matters of other chambers members; nor did the matters of other chambers members require his disqualification from serving on the panel. . . It is not for this court, given its limited scope of review, to second guess the [LCIA’s] Division’s interpretation of LCIA’s conflict rules.
Finally, the Court stated that Belize failed to meet its burden to prove that the selection of arbitrators would offend the U.S. public policy, that the arbitration panel’s alleged impartiality deprived Belize of an opportunity to be heard, and that the arbitration agreement was invalid under the law of Belize. Although Belize is not a party to the New York Convention, the Court determined to enforce the award, because it was rendered “in the territory of a party to the Convention.”