Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-06-07058/USCOURTS-caDC-06-07058-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 12, 2007 Decided May 25, 2007

No. 06-7058

TERMORIO S.A. E.S.P. AND

LEASECO GROUP, LLC,

APPELLANTS

V.

ELECTRANTA S.P., ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 03cv02587)

Thomas R. Johnson, Jr. argued the cause for appellants.

With him on the briefs were Stephanie K. Hines, Kevin M. Sali,

and Benjamin Sharp.

Paul J. Kiernan argued the cause for appellees. With him

on the brief was Stephen A. Bogorad.

Before: TATEL and GARLAND, Circuit Judges, and

EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

EDWARDS.

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EDWARDS, Senior Circuit Judge: Appellant TermoRio S.A.

E.S.P. (“TermoRio”) and appellee Electrificadora del Atlantico

S.A. E.S.P. (“Electranta”), a state-owned public utility, entered

into a Power Purchase Agreement (“Agreement”) pursuant to

which TermoRio agreed to generate energy and Electranta

agreed to buy it. When appellee allegedly failed to meet its

obligations under the Agreement, the parties submitted their

dispute to an arbitration Tribunal in Colombia in accordance

with their Agreement. The Tribunal issued an award in excess

of $60 million dollars in favor of TermoRio. Shortly after the

Tribunal issued its award, Electranta filed an “extraordinary

writ” in a Colombia court seeking to overturn the award. In due

course, the Consejo de Estado (“Council of State”), Colombia’s

highest administrative court, nullified the arbitration award on

the ground that the arbitration clause contained in the parties’

Agreement violated Colombian law. 

Following the judgment by the Consejo de Estado,

TermoRio and co-appellant LeaseCo Group, LLC (“LeaseCo”),

an investor in TermoRio, filed suit in the District Court against

Electranta and the Republic of Colombia seeking enforcement

of the Tribunal’s arbitration award. Appellants contended that

enforcement of the award is required under the Federal

Arbitration Act, 9 U.S.C. § 201 (“FAA”), which implements the

Convention on the Recognition and Enforcement of Foreign

Arbitral Awards, opened for signature June 10, 1958, 21 U.S.T.

2517, reprinted in 9 U.S.C. § 201 (historical and statutory notes)

(“New York Convention”). The District Court dismissed

LeaseCo as a party for want of standing, dismissed appellants’

enforcement action for failure to state a claim upon which relief

could be granted, and, in the alternative, dismissed appellants’

action on the ground of forum non conveniens. TermoRio S.A.

E.S.P. v. Electrificadora del Atlantico S.A. E.S.P., 421 F. Supp.

2d 87 (D.D.C. 2006). 

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We affirm the judgment of the District Court. The

arbitration award was made in Colombia and the Consejo de

Estado was a competent authority in that country to set aside the

award as contrary to the law of Colombia. See New York

Convention art. V(1)(e) (“Recognition and enforcement of the

award may be refused, at the request of the party against whom

it is invoked . . . if that party furnishes . . . proof that: . . . [t]he

award . . . has been set aside . . . by a competent authority of the

country in which, or under the law of which, that award was

made.”). Because there is nothing in the record here indicating

that the proceedings before the Consejo de Estado were tainted

or that the judgment of that court is other than authentic, the

District Court was, as it held, obliged to respect it. See Baker

Marine (Nig.) Ltd. v. Chevron (Nig.) Ltd., 191 F.3d 194 (2d Cir.

1999). Accordingly, we hold that, because the arbitration award

was lawfully nullified by the country in which the award was

made, appellants have no cause of action in the United States to

seek enforcement of the award under the FAA or the New York

Convention.

I. BACKGROUND

The facts in this case are carefully set forth in the District

Court’s published Memorandum opinion. See TermoRio, 421

F. Supp. 2d at 89-91. Because the facts relevant to this appeal

are undisputed, we have incorporated significant portions of the

District Court’s statement as a part of our Background section.

Defendant Republic of Colombia is a foreign state.

Defendant [Electranta], incorporated in 1957 to provide

electricity services in and around Barranquilla, Colombia,

was 87% owned and controlled by Colombia.

Consequently, it is an agency or instrumentality of

Colombia within the meaning of the Foreign Sovereign

Immunities Act (28 U.S.C. § 1603(b)).

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In the mid-1990s, Colombia’s Atlantic coast

experienced significant electricity shortages. In 1995

LeaseCo entered into discussions with Electranta to

modernize Electranta’s operations and build a new power

plant in Colombia. A year later, LeaseCo and Electranta

formed two Colombian entities seriatim: first, Coenergia,

and then TermoRio. Coenergia owned 99.9% of all shares

of TermoRio. Initially, LeaseCo and Electranta owned

roughly equal shares of Coenergia, so that they accordingly

owned roughly equal shares of TermoRio. However, at the

time of Electranta’s complaint (in June 2004), LeaseCo and

Electranta were transferring sole ownership of the 99.9% of

the shares of TermoRio to LeaseCo.

At the heart of this lawsuit is [the Agreement] between

TermoRio and Electranta [executed] in June 1997. Under

this Agreement, TermoRio agreed to generate energy and

Electranta agreed to buy it. In reliance on this Agreement,

TermoRio invested more than $7 million to construct a

power plant. The Agreement also provided that any dispute

between the parties would be resolved by binding

arbitration in Colombia.

However, in March 1998, Colombia announced a plan

to sell the assets of all its Atlantic Coast utilities, including

Electranta, to private owners and other Colombian utilities.

On April 16, 1998, Colombia began to privatize by creating

a new company, Electrocaribe, to receive and hold

Electranta’s assets and liabilities. However, at the behest of

Colombia, Electranta did not transfer its duties under the

Agreement to buy power from TermoRio. Electranta was

left with obligations under the Agreement to buy power, but

no resources to do so. As a result, Electranta failed to buy

power from TermoRio and breached the Agreement. This

breach of the Agreement, plaintiffs allege, had a direct

effect in the United States affecting the extensive marketing

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of [Electrocaribe’s] assets in the United States, by affecting

the price of these assets, by causing United States

purchasers to acquire a substantial interest in these assets,

and by eliminating any obligation for Electrocaribe . . . to

fulfill the [Agreement].

. . . .

The Agreement’s arbitration clause provides (as

translated):

Any dispute or controversy arising between the Parties

in connection to the execution, interpretation,

performance or liquidation of the Contract shall be

settled through mechanisms of conciliation, amiable

composition or settlement, within a term no longer than

three weeks. If no agreement is reached, either party

may have recourse to an arbitral tribunal that shall be

governed in accordance with the Rules of Conciliation

and Arbitration of the International Chamber of

Commerce. The tribunal shall be made up of three (3)

members appointed by the Chamber, and shall be

seated in the city of Barranquilla[, Colombia]. The

award, which shall be binding on the parties, must be

rendered within a maximum term of three months.

Pursuant to this provision, after defendants failed to

meet their obligations under the Agreement, the parties

entered into a long arbitration process. On December 21,

2000, a Tribunal of three arbitrators, applying ICC

procedural rules, determined that Electranta breached the

Agreement at the direction of Colombia. The Tribunal

ordered Electranta to pay TermoRio an award of $60.3

million USD.

. . . .

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Neither the Republic of Colombia nor Electranta has

complied with the $60 million arbitral award, and both have

refused to pay any portion of it. Plaintiffs allege that

Colombia and Electranta have also sought to undermine the

award in several other respects.

. . . [O]n December 23, 2000 (right after the Tribunal

issued the award), Electranta filed an “extraordinary writ”

with a court in Barranquilla, seeking to overturn the award.

In response the Council of State vacated it. The Council of

State reasoned that the arbitration had to be conducted in

accordance with Colombian law, and Colombian law in

effect as of the date of the Agreement did not expressly

permit the use of ICC procedural rules in arbitration.

In . . . another action, plaintiff TermoRio filed two

lawsuits in Colombian courts to rescind the transfer of

Electranta’s assets and to hold Colombia liable for breach

of the Agreement. A Colombian court dismissed the first

action on procedural grounds. The second count [was] still

pending in the Colombian court system [as of March 17,

2006].

Id. at 89-90 (internal footnotes, quotation marks, and citations

omitted).

In the District Court, appellants TermoRio and LeaseCo

filed an Amended Complaint and Application for Confirmation

and Enforcement of Arbitral Award and for Other Relief. The

appellants initially alleged four causes of action: fraudulent

conveyance, expropriation, an action to enforce the arbitration

award, and breach of contract. By stipulation, however, the first

two claims were dropped, leaving only the action to enforce the

arbitration award and the breach of contract claim before the

District Court. Appellees filed a motion to dismiss in which

they raised numerous defenses, including, inter alia, that the

award was properly vacated by a Colombian court; that the

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District Court lacked subject matter jurisdiction by operation of

the Foreign Sovereign Immunities Act and because the statute

of limitations barred the suit; that the complaint should be

dismissed under the doctrine of forum non conveniens; and that

LeaseCo, an American corporation not party to the Agreement,

lacked standing to enforce the arbitral award.

The District Court, after hearing arguments on the motion

and reviewing the submissions of the parties – which included

supporting memoranda, affidavits, sworn declarations, and the

decisions of the Colombian courts – granted appellees’ motion

to dismiss. The trial court ruled as follows:

[A]n accompanying Order dismisses LeaseCo for lack of

standing. The court lacks subject matter jurisdiction over

plaintiffs’ breach of contract claim both under the Foreign

Sovereign Immunities Act and by operation of the

applicable statute of limitations. Although the court has

subject matter jurisdiction over the remaining arbitral award

enforcement claim, it is dismissed for failure to state a

claim; the Colombian courts have vacated the award. In the

alternative, the order dismisses the complaint on the ground

of forum non conveniens. In this light, defendants’

remaining arguments regarding abstention, dismissal of

Colombia as a party, and service of process on defendants

need not be addressed.

Id. at 92. On appeal, appellants have abandoned their breach of

contract claim. 

Because it is clear and undisputed that TermoRio has

standing to bring this lawsuit, we need not address the standing

of LeaseCo. Military Toxics Project v. EPA, 146 F.3d 948, 954

(D.C. Cir. 1998) (“If one party has standing in an action, a court

need not reach the issue of standing of other parties when it

makes no difference to the merits of the case.” (quoting Ry.

Labor Executives’ Ass’n v. United States, 987 F.2d 806, 810

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(D.C. Cir. 1993))). In addition, because we hold that the District

Court properly dismissed appellants’ enforcement action under

Article V(1)(e) of the New York Convention, we find it

unnecessary to determine whether the case might have been

dismissed on the ground of forum non conveniens, the

alternative basis announced by the District Court. Likewise, we

find it unnecessary to address any presumptive veil-piercing

claim asserted by appellants to allow suit against the Republic

of Colombia or whether such a claim is barred by the relevant

statute of limitations. The only issue of consequence before this

court is whether the District Court erred in dismissing

appellants’ claim to enforce the disputed arbitration award.

II. ANALYSIS

A. Standard of Review

This court reviews de novo the District Court’s dismissal for

failure to state a claim, Stewart v. Nat’l Educ. Ass’n, 471 F.3d

169, 173 (D.C. Cir. 2006). As to the alternative basis for

dismissal announced by the District Court, “[w]e may reverse a

forum non conveniens determination . . . only for a ‘clear abuse

of discretion.’” TMR Energy Ltd. v. State Prop. Fund of

Ukraine, 411 F.3d 296, 303 (D.C. Cir. 2005) (quoting Piper

Aircraft Co. v. Reyno, 454 U.S. 235, 257 (1981)); see also Piper

Aircraft, 454 U.S. at 257 (“The forum non conveniens

determination is committed to the sound discretion of the trial

court. It may be reversed only when there has been a clear

abuse of discretion . . . .”). 

B. The Applicable International Agreement

As the District Court noted,

[t]he United States has ratified and codified two

Conventions that allow courts in one country to enforce

arbitral awards rendered in other signatory countries. See

Inter-American Convention on International Commercial

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Arbitration[, opened for signature Jan. 30, 1975, O.A.S.T.S.

No. 42, 1438 U.N.T.S. 245,] (the “Panama Convention”)

(reprinted after 9 U.S.C. § 301), and The Convention on the

Recognition and Enforcement of Arbitral Awards (the

“New York Convention”) (reprinted after 9 U.S.C. § 201).

Colombia is a signatory to both of these Conventions. The

New York Convention provides that signatory nations are

to recognize and enforce arbitral awards rendered in other

nations. See New York Convention Art. III. However,

enforcement of awards “may be refused” if, inter alia, they

were set aside by a competent authority in the country in

which the award was made. See New York Convention Art.

V(1)(e).

. . . . 

FN4. [Appellants] maintain that the Panama

Convention applies to this dispute because a majority

of the parties to the arbitration agreement are citizens

of states that have ratified the Panama Convention. See

9 U.S.C. § 305(1). However, codification of the

Panama Convention incorporates by reference the

relevant provisions of the New York Convention (see

9 U.S.C. § 302), making discussion of the Panama

Convention unnecessary.

TermoRio, 421 F. Supp. 2d at 91 & n.4. We need not decide

whether 9 U.S.C. § 302 incorporates the New York Convention,

as opposed to other provisions of law related to the New York

Convention, because the relevant provisions of the Panama

Convention and the New York Convention are substantively

identical for purposes of this case and neither party challenges

the District Court’s analysis. We therefore resolve this matter

with reference to and using the language of the New York

Convention.

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C. The Validity of a Foreign Judgment Vacating an

Arbitration Award

The Supreme Court has recognized an “emphatic federal

policy in favor of arbitral dispute resolution.” Mitsubishi

Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614,

631 (1985); see also Dean Witter Reynolds Inc. v. Byrd, 470

U.S. 213, 217 (1985) (noting that where parties have seen fit to

adopt arbitration clauses in their agreements, there is a “strong

federal policy in favor of enforcing [them]”). “And at least

since this Nation’s accession in 1970 to the [New York]

Convention, and the implementation of the Convention in the

same year by amendment of the Federal Arbitration Act, [9

U.S.C. §§ 201-208], that federal policy applies with special

force in the field of international commerce.” Mitsubishi, 473

U.S. at 631 (internal citation omitted). “As international trade

has expanded in recent decades, so too has the use of

international arbitration to resolve disputes arising in the course

of that trade.” Id. at 638. The Convention’s purpose was to

“encourage the recognition and enforcement of commercial

arbitration agreements in international contracts and to unify the

standards by which agreements to arbitrate are observed and

arbitral awards are enforced in the signatory countries.” Scherk

v. Alberto-Culver Co., 417 U.S. 506, 520 n.15 (1974). And, as

the Court has noted, “[t]he utility of the [New York] Convention

in promoting the process of international commercial arbitration

depends upon the willingness of national courts to let go of

matters they normally would think of as their own.” Mitsubishi,

473 U.S. at 639 n.21. 

The basic understanding of the New York Convention is

that “[e]ach Contracting State shall recognize arbitral awards as

binding and enforce them in accordance with the rules of

procedure of the territory where the award is relied upon, under

the conditions laid down in the . . . articles [of the Convention].”

New York Convention, art. III. Under the Convention, “the

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critical element is the place of the award: if that place is in the

territory of a party to the Convention, all other Convention states

are required to recognize and enforce the award, regardless of

the citizenship or domicile of the parties to the arbitration.”

Creighton Ltd. v. Gov’t of the State of Qatar, 181 F.3d 118, 121

(D.C. Cir. 1999) (quoting RESTATEMENT (THIRD) OF FOREIGN

RELATIONS LAW § 487 cmt. b (1987)). 

Although its purpose is to encourage the recognition and

enforcement of commercial arbitration agreements in

international contracts, the New York Convention enumerates

specific grounds upon which a court may refuse recognition and

enforcement of an arbitration award. On this point, Article V

provides:

1. Recognition and enforcement of the award may be

refused, at the request of the party against whom it is

invoked, only if that party furnishes to the competent

authority where the recognition and enforcement is sought,

proof that:

(a) The parties to the agreement . . . were, under the

law applicable to them, under some incapacity, or the

said agreement is not valid under the law to which the

parties have subjected it or, failing any indication

thereon, under the law of the country where the award

was made; or

(b) The party against whom the award is invoked was

not given proper notice of the appointment of the

arbitrator or of the arbitration proceedings or was

otherwise unable to present his case; or

(c) The award deals with a difference not

contemplated by or not falling within the terms of the

submission to arbitration, or it contains decisions on

matters beyond the scope of the submission to

arbitration, provided that, if the decisions on matters

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submitted to arbitration can be separated from those

not so submitted, that part of the award which contains

decisions on matters submitted to arbitration may be

recognized and enforced; or

(d) The composition of the arbitral authority or the

arbitral procedure was not in accordance with the

agreement of the parties, or, failing such agreement,

was not in accordance with the law of the country

where the arbitration took place; or

(e) The award has not yet become binding on the

parties, or has been set aside or suspended by a

competent authority of the country in which, or under

the law of which, that award was made.

2. Recognition and enforcement of an arbitral award may

also be refused if the competent authority in the country

where recognition and enforcement is sought finds that:

(a) The subject matter of the difference is not capable

of settlement by arbitration under the law of that

country; or

(b) The recognition or enforcement of the award

would be contrary to the public policy of that country.

New York Convention art. V(1)-(2). These provisions of the

Convention have been implemented by the FAA. See 9 U.S.C.

§ 207 (“The court shall confirm the award unless it finds one of

the grounds for refusal or deferral of recognition or enforcement

of the award specified in the said Convention.”). 

The Convention provides a carefully crafted framework for

the enforcement of international arbitral awards. Under the

Convention, “[o]nly a court in a country with primary

jurisdiction over an arbitral award may annul that award.”

Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan

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Gas Bumi Negara, 364 F.3d 274, 287 (5th Cir. 2004) (“Karaha

Bodas II”). As the Second Circuit has noted: 

the Convention mandates very different regimes for the

review of arbitral awards (1) in the state in which, or under

the law of which, the award was made, and (2) in other

states where recognition and enforcement are sought. The

Convention specifically contemplates that the state in

which, or under the law of which, the award is made, will

be free to set aside or modify an award in accordance with

its domestic arbitral law and its full panoply of express and

implied grounds for relief. See Convention art. V(1)(e).

However, the Convention is equally clear that when an

action for enforcement is brought in a foreign state, the

state may refuse to enforce the award only on the grounds

explicitly set forth in Article V of the Convention.

Yusuf Ahmed Alghanim & Sons v. Toys “R” Us, Inc., 126 F.3d

15, 23 (2d Cir. 1997).

In this case, appellees point out that, because the arbitration

award was made by a Colombian Tribunal convened in that

country, pursuant to an agreement between Colombian

companies to buy and sell electrical power in that country,

Colombia is the nation with primary jurisdiction over this

dispute. Appellees argue further that, under the clear terms of

the Convention, appellants’ action to enforce the arbitration

award fails to state a cause of action. On this latter point,

appellees point to Article V(1)(e) of the Convention, which

provides that

[r]ecognition and enforcement of [an] award may be

refused, at the request of the party against whom it is

invoked, . . . if that party furnishes . . . proof that: . . . [t]he

award . . . has been set aside . . . by a competent authority

of the country in which, or under the law of which, that

award was made.

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New York Convention art. V(1)(e). Pursuant to this provision

of the Convention, a secondary Contracting State normally may

not enforce an arbitration award that has been lawfully set aside

by a “competent authority” in the primary Contracting State.

Because the Consejo de Estado is undisputedly a “competent

authority” in Colombia (the primary State), and because there is

nothing in the record here indicating that the proceedings before

the Consejo de Estado were tainted or that the judgment of that

court is other than authentic, appellees contend that appellants

have no cause of action under the FAA or the New York

Convention to enforce the award in a Contracting State outside

of Colombia. On the record at hand, we agree.

In reaching this conclusion, we generally subscribe to the

reasoning of the Second Circuit in Baker Marine, 191 F.3d 194.

In that case, Baker Marine, a barge company, executed a

services contract with Danos, a shipping concern. The contract

contained a clause requiring the parties to arbitrate disputes or

controversies arising under their agreement. Following such a

dispute, the parties “submitted to arbitration before panels of

arbitrators in Lagos, Nigeria.” Id. at 195. The panels awarded

Baker Marine nearly $3 million in damages, but the award was

subsequently set aside by a Nigerian court. Baker Marine then

sought enforcement of the award in the United States District

Court for the Northern District of New York. The trial court

refused to recognize the award, citing Article V(1)(e) of the

New York Convention, as well as principles of comity. On

appeal, Baker Marine argued that the trial court erred in refusing

to enforce the award, because it had been set aside by the

Nigerian court on grounds that would have been invalid under

U.S. law if presented in an American court. The appellate court

rejected this argument and affirmed the trial court’s decision not

to recognize the award, noting that the parties “contracted in

Nigeria that their disputes would be arbitrated under the laws of

Nigeria.” Id. at 197. The court also remarked on the

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undesirable consequences that would likely follow from

adoption of Baker Marine’s argument:

[A]s a practical matter, mechanical application of domestic

arbitral law to foreign awards under the Convention would

seriously undermine finality and regularly produce

conflicting judgments. If a party whose arbitration award

has been vacated at the site of the award can automatically

obtain enforcement of the awards under the domestic laws

of other nations, a losing party will have every reason to

pursue its adversary “with enforcement actions from

country to country until a court is found, if any, which

grants the enforcement.”

Id. at 197 n.2 (quoting ALBERT JAN VAN DEN BERG, THE NEW

YORK ARBITRATION CONVENTION OF 1958: TOWARDS A

UNIFORM JUDICIAL INTERPRETATION 355 (1981)). The same

principles and concerns govern here, where appellants seek to

enforce an arbitration award that has been vacated by

Colombia’s Consejo de Estado. For us to endorse what

appellants seek would seriously undermine a principal precept

of the New York Convention: an arbitration award does not

exist to be enforced in other Contracting States if it has been

lawfully “set aside” by a competent authority in the State in

which the award was made. This principle controls the

disposition of this case.

D. Considerations of “Public Policy”

Appellants argue that courts in the United States “have

discretion under the Convention to enforce an award despite

annulment in another country,” Karaha Bodas Co. v.

Perusahaan Pertambangan Minyak Dan Gas, 335 F.3d 357, 369

(5th Cir. 2003), because Article V(1)(e) merely says that

“[r]ecognition and enforcement may be refused” if the award has

been set aside by a competent authority in the primary state,

New York Convention art. V(1)(e) (emphasis added). More

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particularly, appellants contend that “a state is not required to

give effect to foreign judicial proceedings grounded on policies

which do violence to its own fundamental interests.”

Appellants’ Br. at 22 (quoting Laker Airways Ltd. v. Sabena,

Belgian World Airlines, 731 F.2d 909, 931 (D.C. Cir. 1984)).

Appellants’ characterizations of the applicable law are

understated and thus misguided.

Appellants concede that Baker Marine is not incorrect in its

holding that “it is insufficient to enforce an award solely because

a foreign court’s grounds for nullifying the award would not be

recognized under domestic United States law.” Appellants’ Br.

at 24. Rather, appellants allege that the District Court should

have exercised its discretion to enforce the arbitration award in

this case, because, inter alia, “the Council of State’s decision

was contrary to both domestic Colombian and international law;

recognition of that decision would frustrate clearly expressed

international and United States policy; and the process leading

to the nullification decision demonstrated the Colombian

government’s determination to deny Plaintiffs fair process.” Id.

In advancing their claims, appellants rely heavily on In re

Chromalloy Aeroservices, 939 F. Supp. 907 (D.D.C. 1996). In

that case, the District Court addressed an arbitration agreement

between the Egyptian Air Force and an American in which the

parties provided that the losing party would not seek review of

the arbitration award. While the American company’s petition

for enforcement of its award was pending before the District

Court, Egypt filed an appeal with the Egyptian Court of Appeal

to nullify the award. The District Court refused to recognize the

decision of the Egyptian court to nullify the award, finding that

to do so would violate clear United States public policy in favor

of arbitration and would reward Egypt’s breach of the express

contractual agreement not to take any appeal from the arbitration

award. We need not decide whether the holding in Chromalloy

is correct, because, as appellees point out, “the present case is

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plainly distinguishable from Chromalloy where an express

contract provision was violated by pursuing an appeal to vacate

the award. Here, Electranta preserved its objection that the

panel was not proper or authorized by law, promptly raised it in

the Colombian courts, and received a definitive ruling by the

highest court on this question of law.” Appellees’ Br. at 13

(internal citation omitted). 

Furthermore, appellants are simply mistaken in suggesting

that the Convention policy in favor of enforcement of arbitration

awards effectively swallows the command of Article V(1)(e).

A judgment whether to recognize or enforce an award that has

not been set aside in the State in which it was made is quite

different from a judgment whether to disregard the action of a

court of competent authority in another State. “The Convention

specifically contemplates that the state in which, or under the

law of which, the award is made, will be free to set aside or

modify an award in accordance with its domestic arbitral law

and its full panoply of express and implied grounds for relief.”

Yusuf Ahmed Alghanim & Sons, 126 F.3d at 23; see also Karaha

Bodas II, 364 F.3d at 287-88. This means that a primary State

necessarily may set aside an award on grounds that are not

consistent with the laws and policies of a secondary Contracting

State. The Convention does not endorse a regime in which

secondary States (in determining whether to enforce an award)

routinely second-guess the judgment of a court in a primary

State, when the court in the primary State has lawfully acted

pursuant to “competent authority” to “set aside” an arbitration

award made in its country. Appellants go much too far in

suggesting that a court in a secondary State is free as it sees fit

to ignore the judgment of a court of competent authority in a

primary State vacating an arbitration award. It takes much more

than a mere assertion that the judgment of the primary State

“offends the public policy” of the secondary State to overcome

a defense raised under Article V(1)(e). 

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The decision in Baker Marine notes that the “[r]ecognition

of the [foreign court’s] judgment in [that] case d[id] not conflict

with United States public policy,” 191 F.3d at 197 n.3, thus at

least implicitly endorsing a “public policy” gloss on Article

V(1)(e). However, the decision does not say that a court in the

United States has unfettered discretion to impose its own

considerations of public policy in reviewing the judgment of a

court in a primary State vacating an arbitration award based

upon the foreign court’s construction of the law of the primary

State. Rather, as appellees argue, Baker Marine is consistent

with the view that, “[w]hen a competent foreign court has

nullified a foreign arbitration award, United States courts should

not go behind that decision absent extraordinary circumstances

not present in this case.” Appellees’ Br. at 12.

In applying Article V(1)(e) of the New York Convention,

we must be very careful in weighing notions of “public policy”

in determining whether to credit the judgment of a court in the

primary State vacating an arbitration award. The test of public

policy cannot be simply whether the courts of a secondary State

would set aside an arbitration award if the award had been made

and enforcement had been sought within its jurisdiction. As

noted above, the Convention contemplates that different

Contracting States may have different grounds for setting aside

arbitration awards. Therefore, it is unsurprising that the courts

have carefully limited the occasions when a foreign judgment is

ignored on grounds of public policy.

A judgment is unenforceable as against public policy

to the extent that it is “repugnant to fundamental notions of

what is decent and just in the State where enforcement is

sought.” Tahan v. Hodgson, 662 F.2d 862, 864 (D.C. Cir.

1981) (quoting Rest.2d Conflict of Laws § 117, comment c

(1971)). The standard is high, and infrequently met. As

one court wrote, “[o]nly in clear-cut cases ought it to avail

defendant.” Tahan, 662 F.2d at 866 n.17 (citing von

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19

Mehren & Trautman, Recognition of Foreign

Adjudications: A Survey and a Suggested Approach, 81

HARV. L. REV. 1601, 1670 (1968); Paulsen & Sovern,

“Public Policy” in the Conflict of Laws, 56 COLUM.L.REV.

969, 980-81, 1015-16 (1956)). In the classic formulation,

a judgment that “tends clearly” to undermine the public

interest, the public confidence in the administration of the

law, or security for individual rights of personal liberty or

of private property is against public policy.

Ackermann v. Levine, 788 F.2d 830, 841 (2d Cir. 1986). 

Article V(2)(b) of the Convention, unlike Article V(1)(e),

incorporates an express public policy exception. Article V(2)(b)

provides:

Recognition and enforcement of an arbitral award may also

be refused if the competent authority in the country where

recognition and enforcement is sought finds that . . . [t]he

recognition or enforcement of the award would be contrary

to the public policy of that country.

New York Convention, art. V(2)(b). It is noteworthy that in

construing this provision the courts have been very careful not

to stretch the compass of “public policy.” As one court has

noted:

Under Article V(2)(b) of the New York Convention, a

court may refuse to recognize or enforce an arbitral award

if it would be contrary to the public policy of that country.

The public policy defense is to be construed narrowly to be

applied only where enforcement would violate the forum

state’s most basic notions of morality and justice.

Karaha Bodas II, 364 F.3d at 305-06 (internal citations and

quotation marks omitted). Given that Article V(1)(e) contains

no exception for public policy, it would be strange indeed to

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recognize such an implicit limitation in Article V(1)(e) that is

broader than the express limitation in Article V(2)(b). 

Accepting that there is a narrow public policy gloss on

Article V(1)(e) of the Convention and that a foreign judgment

is unenforceable as against public policy to the extent that it is

“repugnant to fundamental notions of what is decent and just in

the United States,” Tahan, 662 F.2d at 864 (internal quotation

marks omitted), appellants’ claims still fail. Appellants have

neither alleged nor provided any evidence to suggest that the

parties’ proceedings before Colombia’s Consejo de Estado or

the judgment of that court violated any basic notions of justice

to which we subscribe. 

Appellants contend that the Consejo de Estado’s ruling

conflicts with Colombia’s obligation under the New York

Convention, but that bare allegation surely provides no basis for

us to ignore Article V(1)(e) on grounds of public policy. As the

court noted in Yusuf Ahmed Alghanim & Sons:

[U]nder the Convention, the power and authority of the

local courts of the rendering state remain of paramount

importance. “What the Convention did not do . . . was

provide any international mechanism to insure the validity

of the award where rendered. This was left to the

provisions of local law. The Convention provides no

restraint whatsoever on the control functions of local courts

at the seat of arbitration.” [W. Laurence Craig, Some

Trends and Developments in the Laws and Practice of

International Commercial Arbitration, 30 TEX.INT’L L.J.1,

11 (1995).]. Another commentator explained:

Significantly, [Article V(1)(e)] fails to specify the

grounds upon which the rendering State may set aside

or suspend the award. While it would have provided

greater reliability to the enforcement of awards under

the Convention had the available grounds been defined

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in some way, such action would have constituted

meddling with national procedure for handling

domestic awards, a subject beyond the competence of

the Conference.

Leonard V. Quigley, Accession by the United States to the

United Nations Convention on the Recognition and

Enforcement of Foreign Arbitral Awards, 70 YALE L.J.

1049, 1070 (1961). From the plain language and history of

the Convention, it is thus apparent that a party may seek to

vacate or set aside an award in the state in which, or under

the law of which, the award is rendered. Moreover, the

language and history of the Convention make it clear that

such a motion is to be governed by domestic law of the

rendering state . . . .

126 F.3d at 22-23. 

The District Court correctly observed that “[t]his matter is

a peculiarly Colombian affair,” concerning, as it does, “a dispute

involving Colombian parties over a contract to perform services

in Colombia which led to a Colombian arbitration decision and

Colombian litigation.” TermoRio, 421 F. Supp. 2d at 101, 103.

To this, we would add that the parties also agreed to be bound

by Colombian law. The Consejo de Estado, Colombia’s highest

administrative court, is the final expositor of Colombian law,

and we are in no position to pronounce the decision of that court

wrong. 

E. The District Court’s Grant of Appellees’ Motion To

Dismiss 

Appellants have raised one final issue that warrants our

attention. The District Court dismissed appellants’ action under

Federal Rule of Civil Procedure 12(b)(6), which provides that a

suit may be dismissed on the pleadings for “failure to state a

claim upon which relief can be granted.” FED. R. CIV. P.

12(b)(6). Normally, dismissal is appropriate under Rule

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12(b)(6) only if it is “clear that no relief could be granted under

any set of facts that could be proved consistent with the

allegations.” Broudy v. Mather, 460 F.3d 106, 116-17 (D.C. Cir.

2006) (internal quotation marks omitted) (discussing dismissal

under FED. R. CIV. P. 12(b)(6)). Appellants claim that the

District Court erred in granting the motion to dismiss under Rule

12(b)(6), because an affirmative defense only supports dismissal

if that defense is unavoidably established by the facts alleged on

the face of the complaint. Appellants argue that Colombia’s

nullification of the arbitration award is only grounds for a Rule

12(b)(6) dismissal if the nullification conclusively defeats

appellants’ claim. Application of Article V(1)(e) cannot be

conclusive, appellants say, because, in their view, the New York

Convention and United States law provide that an arbitration

award can be enforced despite having been nullified in the

country in which it was issued. Thus, according to appellants,

the District Court erred in dismissing their action under Rule

12(b)(6) solely on the basis of a foreign nullification.

The short answer to appellants’ claim is that their reference

to the requirements of Rule 12(b)(6) is misplaced. Chapter 2 of

the FAA incorporates and codifies the New York Convention.

9 U.S.C. § 201. However, the statute makes clear that “[Chapter

1 of the FAA] applies to actions and proceedings brought under

[Chapter 2] to the extent [Chapter 1] is not in conflict with

[Chapter 2] or the Convention as ratified by the United States.”

Id. § 208. Chapter 1, in turn, states that “[a]ny application to the

court hereunder shall be made and heard in the manner provided

by law for the making and hearing of motions, except as

otherwise herein expressly provided.” Id. § 6. Therefore, it

appears that motions to enforce arbitral awards should proceed

under motions practice, not notice pleading. Indeed,

[o]ne of the clearest examples of the operation of Section

208 is its making motion practice under Section 6

applicable to proceedings under the [New York

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Convention]. Thus, an arbitration award under the

Convention may be enforced by filing a petition or

application for an order confirming the award supported by

an affidavit. The hearing on such a petition or application

will take the form of a summary procedure in the nature of

federal motion practice.

3 FED. PROC., L. ED. § 4:183 (1999). 

In light of the foregoing, it is clear that the District Court

properly addressed appellants’ application for enforcement of

the arbitration award. The District Court reviewed appellants’

application and appellees’ response, reviewed the affidavits

submitted by the parties in support of their respective positions,

and, on the basis of that review, arrived at its judgment. This

satisfied the District Court’s obligation under the New York

Convention and squared with the approach that has been

endorsed by some of our sister circuits. See, e.g., Productos

Mercantiles E Industriales, S.A. v. Faberge USA, Inc., 23 F.3d

41, 46 (2d Cir. 1994) (“Since [appellee] appropriately sought

relief in the form of a motion, the court was not required to

comply with the pleading requirements of FED. R. CIV. P.

12(b).”); O.R. Sec., Inc. v. Prof’l Planning Assocs., 857 F.2d

742, 745-46 (11th Cir. 1988) (same); Imperial Ethiopian Gov’t

v. Baruch-Foster Corp., 535 F.2d 334, 335 & n.2 (5th Cir. 1976)

(same).

Furthermore, we note that, even if we were to assess the

District Court’s action by reference to the rules of notice

pleading, we would find no error. Where, as here, both parties

had sufficient opportunity to present evidence beyond the

pleadings, this court has the authority to convert a motion to

dismiss under Rule 12(b)(6) to a grant of summary judgment

under Federal Rule of Civil Procedure 56 and affirm the

judgment of the District Court. Ctr. for Auto Safety v. Nat’l

Highway Traffic Safety Admin., 452 F.3d 798, 805 (D.C. Cir.

2006). Summary judgment under Rule 56 is appropriate where

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the pleadings and the record “show that there is no genuine issue

as to any material fact and that the moving party is entitled to

judgment as a matter of law.” Kingman Park Civic Ass’n v.

Williams, 348 F.3d 1033, 1041 (D.C. Cir. 2003) (quoting FED.

R. CIV. P. 56(c)). Such is the case here. 

Both parties had ample time to submit documents outside

of the pleadings and did, in fact, submit such evidence.

However, as noted by the District Court, appellants did not so

much as allege that the proceedings in Colombia were repugnant

to the public policy of the United States. TermoRio, 421 F.

Supp. 2d at 102. And during oral argument before this court,

appellants conceded that they were in no way foreclosed from

introducing additional evidence or materials to the District Court

to support a challenge to the validity or integrity of the

proceedings that took place in Colombia. On this record, given

the undisputed facts and the command of Article V(1)(e) of the

New York Convention, summary judgment is appropriate. We

must honor the judgment of the Colombia court vacating the

disputed arbitration award, because there is nothing in the record

here indicating that the proceedings before the Consejo de

Estado were fatally flawed or that the judgment of that court is

other than authentic. 

III. CONCLUSION

For the foregoing reasons, the judgment of the District

Court dismissing appellants’ application for enforcement of the

arbitration award is affirmed.

So ordered.

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