DRC, Inc. v. Republic of Honduras, Civil Action No. 10-0003 (PLF) (D.D.C. Mar. 2011), involves efforts by DRC to confirm and enforce a $51 million arbitral award against the Republic of Honduras. The arbitrations and litigations arose out of a construction contract. DRC attempted to confirm its Award in a proceeding before the Honduran Supreme Court. In that proceeding DRC also sought a temporary suspension of the recognition and enforcement proceedings given efforts by the Honduran government to resolve the matter amicably. Yet DRC thereafter filed enforcement proceedings in the District Court for the District of Columbia.
The interesting international practice rulings in the case include the following:
First, the Court determined that actions to enforce “foreign arbitration awards are governed either by the Inter-American Convention on International Commercial Arbitration, also known as the Panama Convention, and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, known as the New York Convention. (See generally the discussion of efforts to enforce arbitral awards in our e-book, International Practice: Topics and Trends.) Although the parties agreed that the Panama Convention applied, the Court found more authority under the New York Convention and found that both conventions “are intended to achieve the same results, and their key provisions adopt the same standards, phrased in the legal style appropriate for each organization”.
Second, Article VI of the Panama Convention provides a court with the discretion to “postpone a decision on the execution of the arbitral decision” if there is a pending action in the State in which, or according to the law of which, the arbitral award was made”. There is no analog under the New York Convention, though the Court observed the settled law in the Second Circuit concerning the circumstances under which a case should be adjourned pending the outcome of non-U.S. proceedings. E.g., Europcar Italia, S.p.A. v. Maiellano Tours, Inc., 156 F.3d 310 (2d Cir. 1998). The case law balances the emphatic federal policy in favor of arbitral dispute resolution and the possibility that the award will be set aside, and hence the district court “may be acting improvidently by enforcing the award prior to the completion of the foreign proceedings”. This law should be seen as consonant with similar jurisprudence in the Second Circuit staying appeals in that Court in favor of non-U.S. proceedings. See the discussion in Compania Embotelladora Del Pacifico, S.A. v. PepsiCo, Inc., 09-4424-cv (2d Cir. 6/15/10), where the Court of Appeals granted a motion to stay an appeal pending the final resolution of certain court proceedings in Peru. (The author is lead counsel in that case.)