I

104TH CONGRESS

2D SESSION H. R. 2970

To provide for a judicial remedy for United States persons injured as a

result of violations by foreign states of their arbitral obligations under

international law.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 23, 1996

Mr. MCCOLLUM (for himself and Mr. SHAW) introduced the following bill;

which was referred to the Committee on the Judiciary

A BILL

To provide for a judicial remedy for United States persons

injured as a result of violations by foreign states of

their arbitral obligations under international law.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘International Arbitra5 tion Enforcement Act of 1996’’.

6 SEC. 2. FINDINGS.

7 The Congress makes the following findings:
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1 (1) Arbitration is an efficient and flexible dis2 pute resolution mechanism of great benefit to United

3 States persons doing business internationally.

4 (2) In some countries, particularly those with

5 undeveloped or inconsistent judicial systems, inter6 national arbitration may be the only fair and reliable

7 dispute resolution mechanism available to United

8 States persons.

9 (3) The usefulness of international arbitration

10 depends in large measure on the commitment of for11 eign states to enforce foreign arbitral awards pursu12 ant to their accession to, and observance of, the

13 Convention on the Recognition and Enforcement of

14 Foreign Arbitral Awards.

15 (4) United States persons are often without

16 remedies when foreign states violate the Convention

17 by refusing to enforce foreign arbitral awards or by

18 otherwise impairing the ability to collect the awards

19 by improperly delaying their enforcement.

20 (5) It is in the interest of the United States to

21 maintain the reliability of international arbitration,

22 to promote the observance of the Convention, and to

23 protect United States persons from economic injury

24 resulting from violations of the Convention by for25 eign states.
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1 (6) Similarly, it would be unjust to permit a

2 foreign state to be shielded from liability in the

3 United States for the damages suffered by a United

4 States person abroad resulting from a violation of

5 the Convention by the foreign state.

6 (7) It is therefore in the national interest to

7 create a judicial remedy in favor of United States

8 persons injured as a result of a violation of the Con9 vention by a foreign state and to facilitate the execu10 tion of any judgment entered in such an action.

11 SEC. 3. PURPOSE.

12 The purpose of this Act is to create a civil remedy

13 against foreign states whose violation of the Convention

14 injures United States persons by prohibiting the enforce15 ment of foreign arbitral awards entered in favor of such

16 United States persons or by impairing the ability of such

17 United States persons to collect such awards.

18 SEC. 4. DEFINITIONS.

19 As used in this Act—

20 (1) CONVENTION.—The term ‘‘Convention’’

21 means the Convention on the Recognition and En22 forcement of Foreign Arbitral Awards, done at New

23 York on June 10, 1958.

24 (2) UNITED STATES PERSON.—The term

25 ‘‘United States person’’ means—
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1 (A) any United States citizen or alien ad2 mitted for permanent residence into the United

3 States; and

4 (B) any corporation, trust, partnership, or

5 other judicial entity which is 50 percent or

6 more beneficially owned, directly or indirectly,

7 by individuals described in subparagraph (A).

8 (3) FOREIGN ARBITRAL AWARD.—The term

9 ‘‘foreign arbitral award’’ means any arbitral award

10 to which the Convention applies.

11 SEC. 5. LIABILITY FOR VIOLATION OF THE CONVENTION.

12 (a) CIVIL REMEDY.—(1) Any foreign state that is

13 certified by the President under subsection (b) to have in14 jured a United States person through the state’s violation

15 of the Convention with respect to a foreign arbitral award

16 shall be liable to the United States person for money dam17 ages consisting of—

18 (A) the amount of the foreign arbitral award,

19 plus any interest provided for by the award; and

20 (B) the attorney’s fees and costs incurred by

21 the United States person in bringing an action

22 under this Act with respect to such certification.

23 (2) Actions may be brought under paragraph (1) with

24 respect to arbitral awards entered before, on, or after the

25 date of the enactment of this Act.
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1 (b) PRESIDENTIAL CERTIFICATION.—The President

2 may certify an injury to a United States person through

3 a violation of the Convention if—

4 (1)(A) a foreign state has failed to enforce a

5 foreign arbitral award entered in favor of that Unit6 ed States person in violation of the state’s obliga7 tions under the Convention; or

8 (B) a foreign state has impeded, in violation of

9 its obligations under the Convention, the enforce10 ment of a foreign arbitral award entered in favor of

11 that United States person such that the ability of

12 the United States person to collect the award may

13 reasonably be presumed to have been impaired or re14 duced; and

15 (2) the United States person has exhausted all

16 judicial and administrative remedies in the foreign

17 state in which the arbitral award is sought to be en18 forced, or the further pursuit of such remedies would

19 reasonably be considered to be futile.

20 (c) EFFECT OF PRESIDENTIAL CERTIFICATION.—A

21 Presidential certification that a United States person has

22 been injured by a foreign state’s violation of the Conven23 tion shall, in any action brought under this Act, establish

24 an evidentiary presumption that—
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1 (1) the foreign state certified to have violated

2 the Convention has done so; and

3 (2) the damages suffered by the United States

4 person are equivalent to the amount of the award

5 plus interest, if any.

6 (d) JURISDICTION.—(1) Chapter 85 of title 28, Unit7 ed States Code, is amended by inserting after section 1331

8 the following new section:

9 ‘‘§ 1331a. Civil actions involving violations of the

10 Convention on the Recognition and En11 forcement of Foreign Arbitral Awards

12 ‘‘The district courts shall have exclusive jurisdiction,

13 without regard to the amount in controversy, of any action

14 brought under section 5 of the International Arbitration

15 Enforcement Act of 1996.’’.

16 (2) The table of sections for chapter 85 of title 28,

17 United States Code, is amended by inserting after the

18 item relating to section 1331 the following:

‘‘1331a. Civil actions involving violations of the Convention on the Recognition

and Enforcement of Foreign Arbitral Awards.’’.

19 (e) WAIVER OF SOVEREIGN IMMUNITY.—Section

20 1605 of title 28, United States Code, is amended—

21 (1) by striking ‘‘or’’ at the end of paragraph

22 (5);

23 (2) by striking the period at the end of para24 graph (6) and inserting ‘‘; or’’; and
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1 (3) by adding at the end the following:

2 ‘‘(7) in which the action is brought with respect

3 to violations of the Convention on the Recognition

4 and Enforcement of Foreign Arbitral Awards under

5 section 5 of the International Arbitration Enforce6 ment Act of 1996.’’.

7 (f) NO IMMUNITY FROM ATTACHMENT OR EXECU8 TION.—(1) Section 1610(a) of title 28, United States

9 Code, is amended—

10 (A) by striking the period at the end of para11 graph (6) and inserting ‘‘, or’’; and

12 (B) by adding at the end the following:

13 ‘‘(7) the judgment or attachment relates to a

14 claim for which the foreign state is not immune

15 under section 1605(a)(7), regardless of whether the

16 property is or was involved in or related to the act

17 giving rise to or upon which the claim is based.’’.

18 (2) Section 1610(b) of such title is amended—

19 (A) by striking ‘‘or’’ at the end of paragraph

20 (1);

21 (B) by striking the period at the end of para22 graph (2) and inserting ‘‘, or’’; and

23 (C) by adding at the end the following:

24 ‘‘(3) the judgment or attachment relates to a

25 claim for which the foreign state is not immune
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1 under section 1605(a)(7), regardless of whether the

2 property is or was involved in or related to the act

3 giving rise to or upon which the claim is based.’’.

4 (g) LIMITATIONS PERIOD.—An action under this Act

5 may be brought within one year after the President makes

6 the certification under subsection (b) on which the action

7 is based.

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