UNI TED STATES DI STRI CT COURT FOR THE DI STRI CT OF COLUMBIA

____________________________________ ) DRC, I NC., ) ) Petitioner, ) ) v. ) Civil Action No. 10-0003 ( PL F) ) REPUBL I C OF HO NDURAS, ) ) Respondent. ) ____________________________________)

OPI NI ON This is an action to enfor ce a fore ign a rbitration awa

rd re ndere d in the Republic of Hondura s by

Hondura n arbitra tors under H onduran la

w. The unde rlying dispute a rose out of a construction contr act be tween pe titioner, DRC, I nc. (“ DRC”), and the Fondo Hondur eño de Inversión Social (“ FHI S”) — an instrumenta lity of re spondent, the Republic of H onduras (the “ Republic”) — unde r which D RC agr eed to c onstruct ce rtain water a nd wastew ater sub-projec ts in Honduras. DRC demande d arbitration with FHI S, and, afte r appr ox imately twenty -four

day s of ar

bitration proce eding s, an ar bitration awa

rd wa s rende red a g ainst FHI S that require d FHI S to pay

DRC over $51 million. DRC has now pe titioned this Court for confirmation of this arbitration awa rd ag ainst the Republic of Hondur as. There are six motions currently pendingbefor e the Court: (1) the Republic’s motion to s tay ; (2) the Republic’ s motion t o dismiss ; (3) the Republic’ s motion t o bifurcate; (4) the Re public’s motion to dis miss with prejudice bec ause of DRC’s alleg ed seve re litig ation misconduct; (5) DRC’s motion to strike materials submitted by the Republic in support of itsmotion to di smiss; and (6) DRC’s motion t o place cer tain filings unde r sea l. Upon consideration of the pa rties’ pa pers, the r eleva

nt leg al authorities, and the entire r ecor d in this case, the Court will gr ant the Republic’s motion to stay and will postpone ruling on DRC’s petition in l ight of the pende ncy

of a pr ior, para llel action bef ore the Hondura

n Supreme Court, DRC, I nc. v. F ondo Hondure ño de Inversión Social, Case N o. 301-2009. 1

I . BA CKGROUND A. Construction C

ontract for Infrastructure W ork in Honduras Hurric ane Mitch struc k Central Amer ica in 1998 and c aused tre mendous destruction and dislocation. See Mot. at 1. I n response , the United States Ag ency for The pa pers r eviewe d in connec tion with the pending motion to stay include the 1 following : petition of DRC, I nc. for confirmation of a for eig n arbitration awar d (“Pet.” ); DRC, Inc.’s memor andum in support of its petition for confirmation of a for eig n arbitration awar d (“Pet. Mem.” ); responde nt’s preliminary response to petition to confirm arbitration aw ard ( “Pet. Opp.”) ; DRC’s reply

in support of its petition t o confirm inter national ar

bitration awa

rd (“ Pet. Reply ”); re spondent’s motion to stay action or, in the a lternative, dismiss petition (“Mot.”); DRC’s response to the Republic of Hondura s’ motion to st ay action or, in the a lternative, dismiss petition (“Opp.” ); reply

in support of responde nt’s motion to s tay and, in the alter

native, dismiss petition (“Reply”); United States state ment of intere st (“F irst U.S. St atement” ); DRC, I nc.’s response to the United States’ stateme nt of interest (“ Response to U.S. Statement”); United States Ag ency

for International Development se cond stateme nt of interest (“ Second U.S. Statement”); re spondent’s motion to bifurcate (“B ifurcate Mot.”); DRC’s re sponse to the motion to bifurcate of the Republic of Hondura s (“B ifurcate Opp.”) ; reply in support of responde nt’s motion to bi furc ate ( “B ifurca te Reply ”); re spondent’s motion to dism iss with prejudice the petition for petitioner’s se vere litigation misconduct (“ Misconduct Mot.”); DRC, Inc.’s opposition t o the Republic’s motion to dismi ss for alleg ed litiga tion mis conduct ( “Misconduct Opp.”) ; reply

in support of responde nt’s motion to di smiss wit h prejudice the petition for petitioner’s seve re litig ation misconduct (“Misconduc t Reply ”); DRC’s motion to strike an illega l transcr ipt and other mate rials submitted by the Republic to support its moti on to dismi ss (“Strike Mot.”) ; respondent’ s memorandum in opposition to petit ioner’s motion to strike transcr ipt and other mate rials (“ Strike Opp.”); DRC Inc.’s r eply in support of its moti on to strike an illeg al transc ript and other materials (“ Strike Reply ”); DRC, Inc.’s motion to place unde r sea l (“Sea l Mot.”); responde nt’s memorandum in opposition to petiti oner’ s motion t o seal the r ecor d (“Sea l Opp.”); a

nd DRC I nc.’s r eply

in support of its moti on to seal (“ Seal Reply ”).

2International Development ( “USAI D”) funded r econstruc tion projects in various Centra l

Americ an countr ies, including Hondura s. I d. One suc h projec t was under taken in collabor ation with FHI S, an instrumentality of the Republic of

Hondura s. See id. This project involved the 2 construction of c erta in water and wa stewate r sub-proje cts in Honduras. Pet. at 2; see Mot. at 1. FHI S soli cited bids for the projec t, and DRC was eve ntually selec ted as the c ontrac tor. See Mot. at 1, 6. FHI S and DRC therefor e ente red into a c onstruction contra ct on J une 21, 2000. See Pet., Fa

rmer A ff. Ex. B, Construction Contract (“ Construction Contract”) a t 9, J une 21, 2000; see a lso Pet. at 2; P et. Opp. at 4. Ac cordingto the Republic, the Construction Contract expressly provided “ that the work w ould be funde d by USAI D, and USAI D would pay DRC.” Mot. at 1. I n addition, USAI D issued a L etter of Commi tment to DRC, i n which USAI D committed to pay

for the c onstruction work throug h g rants pay able dire ctly

to DRC. I d. The Construction Contract be tween F HI S and DRC required that all controver sies and disputes be g overne d by the Construction Contract L iability Clauses. Construction Contract at 8; see a lso Pet. at 3. Accor ding to DRC, the Construction Contract L iability Clauses state “the parties’ ag ree ment to resolve disputes ar ising unde r the Contrac t pursuant to arbitration.” Pet. at 3; see Pet., F arme r Aff . Ex . C, Mandatory

Clauses, Construction Services Contrac ts at 17 ¶ 9(c ).

“F ondo Hondure ño de Inversión Social” tr anslates to the Hondur an Social

2 Investment Fund. Mot. at 5. The parties a ppear to ag ree that FHI S is i n fac t an instrumentality of the Republic of

Hondura s. See Pet. at 2; Mot. at 1, 5. The pa rties disag ree , howeve r, whe ther the Republic should be held liable f or F HI S’ purported oblig ations. Compare Mot. at 18 (a rguing that “[t] he sepa

rate ness betwe en F HI S and the Republic . . . must be re specte d”), w ith Opp. at 23 (ar g uing that “FH I S is part of the executive bra nch and, the ref

ore, pa rt of the Republic” ). 3B. Problems Arising Out of the Construction Contract I n J une and July

2004, DRC broug ht two suits aga inst the United States g overnme nt in the United States Court of Fe dera l Claims. S ee D RC, I nc. v. United States, Civil Action No. 04-940C (F ed. Cl., filed J une 1, 2004); DRC, Inc. v. United States, Civil Action No. 04-1124C (F ed. Cl., filed J uly 7, 2004). The f

irst suit, C ivil Action No. 04-940C, arises out of the L etter of

Commi tment that USAI D provided to DRC in connec tion with the Const ruction Contract. See Mot. at 7. DRC allege s that the L etter of Commi tment cre ated a

contra ct betwe en DRC and USAI D, and that USAI D bre ache d that contra ct by failing to pay

cer tain invoices. See Mot., Basombrio Af

f. Ex. 20, C omplaint in C ivil Action No. 04-940C ¶¶ 28-32. The second suit, Ci vil Action No. 04-1124C, relates to an assig nment to USAI D of a differ ent contra ct betwee n DRC and FHI S. See Mot. at 7; see also Mot., B asombrio Aff . Ex . 26, Complaint in Civi l Action No. 04-1124C ¶¶ 44- 48.

Severa l months l ater , in September 2004, the United States broug ht suit aga inst DRC in thi s Court, assertingclaims under the Fa lse Claims Act and the c ommon law. See United States v. DRC, I nc., Civil Action No. 04-1608 (Rober ts, J .) (“ FCA Ac tion”). In this FCA Action, the g overnme nt “see ks to recove r pay ments made to [DRC] for c ontrac t infrastruc ture work in Hondura s, alleg ing inter alia that DRC mis repr esente d itself in order to obtain the contra ct and subc ontrac ted out most of the work without USAI D’s appr oval.” Me morandum Orde r at 1, F eb. 17, 2009 (O berdor fer , J .); see a lso Mot. at 6-7. In other wor ds, the g overnme nt 3

Although this F CA Action is assigne d to J udg e Roberts, DRC’s motion to dism iss 3 that case was tra

nsfer red to Judge O berdor fer

for de cision. See Memora ndum Order

at 1 n.1., Fe b. 17, 2009 (Obe rdorf

er, J.). 4alleg es that DRC committed fraud in both the proc ureme nt and in the per formanc e of the

Construction Contract. See Mot. at. 7.

After the United States filed the F CA Action ag ainst DRC in t his Court, it moved for a stay of the two proc eeding s befor e the Claims Court. That court, ove r DRC’s objection, g rante d the g overnme nt’s motion, finding that

[a] stay in [ Civil Action No. 04-940C and Civil Action No. 04-1124C] is necessar y beca use the dispositive issue of fra ud is alrea dy beinglitigated in the D istrict Court for the District of Columbi a. Movingforwa rd with the proc eeding s in this court would result in duplicative litigation on the issue. The issue of fra ud is releva

nt to the [ L etter of

Commi tment] from USAI D beca use a f inding that DRC ac ted fra udulently in obtaining the Hondura n contra cts would have a dispositive effe ct on DRC’s L OC-base d claims in this court. There fore , the par ties would be eng ag ing in duplicative litigation if the c ases we re pe rmitted to move forw ard. Mot., Basombrio Af

f. Exs. 25 & 31, DRC, I nc. v. United States, Civil Action No. 04-940C, Orde r at 2-3 ( Fe d. Cl. J an. 24, 2005); DRC, Inc. v. United States, Civil Action No. 04-1124C, Orde r at 2-3 ( Fe d. Cl. J an. 24, 2005). A ccor dingly , Civil Action No. 04-940C is prese ntly stay ed pendingresolution of the F CA Action in this C ourt. Wit h respe ct to the latter, on F ebrua ry 17, 2009, J udg e Obe rdorf

er de nied DRC’s motion to di smiss. S ee Me morandum Orde r at 8, F eb. 17, 2009 (Obe rdorf

er, J.); see also Mot. at 7. Thus, the pa rties in the FCA a ction befor e Judge Roberts are now proc eedingwith discovery

.

I n ear ly 2009, DRC demanded a

rbitration with FHI S. Opp. at 8; Pet. at 3. DRC soug ht damag es totaling over $86 million, arisingout of purporte d brea ches of the Construction Contract. See Pet. at 3. Arbitration proc eeding s commence d and, as D RC describes it, “[t] he arbitra l tribunal consisted of thre e Hondur an attorne y s,” Opp. at 8, and the ar bitration

5proce eding s resulted “ in approxim ately 24 hear ing da

y s during which [DRC and FHI S] prese nted approximately

29 witnesses including10 expert witnesses, per formed 7 site inspec tions in t wo countries, a

nd introduced a

pproxi mately

2,165 documents.” I d.; see Pet. at 4. The arbitra l tribunal rende red the arbitration awar d (“A war d”) on Septe mber 8, 2009. Pet. at 4. The Awar d require d that FHI S pay

DRC $51,482,556.90, consisting of the f ollowing:

• $2,799,392.72 for invoice s pending for wor k estimates, mobiliz ation balanc e, diffe rential for the exchang e rate applied to the contr act, c ontrac tual balanc e, and r etention of 5%, plus interest of $2,639,212.24.

• $20,560,341.04 for c osts incurred to pe rfor m additional work a uthorized and ac cepte d but not paid for by FHI S, plus interest of $9,496,270.17.

• $0 for the c ance llation of Contract IA.

• $8,210,451.23 for e x penses incur red f or the leg al and technica l defe nse ag ainst a civil lawsuit and cr iminal investigations stemmi ng from F HI S’s neg lige nce in the administration of the contra ct, plus interest of $2,951,699.74.

• $0 for business va lue lost, including lost g oodwill, commerc ial reputa

tion, commercia l name, etc

.

• $0 for Mora l Damag es.

• $0 for Punitive Damag es.

• $4,825,189.76 for leg al costs, including attorney s’ fe es. Pet. at 5. Two months later, on Nove mber 11, 2009, DRC filed an a ction befor e the Hondura n Supreme Court, re questing acknow ledg ment and execution of this Awar d. See Opp. at 14; Mot. at 2; Mot., Urquiz a De cl. Ex. 3 at 1, DRC ’s Petition for Acknowle dg ment Be fore the

6Hondura

n Supreme Court, Nov. 11, 2009. F HI S opposed DRC’s request, c ontending “that the subject ar bitration awa

rd should not be enf

orce d based on va

rious g rounds, including based on proce dural irr egularities, as be ing in c ontrave ntion of Honduras la w, and pur suant to various provisions of the applica

ble international arbitration tre aty .” Mot. at 2. On F ebrua ry 24, 2010, DRC filed a re quest in the Hondura n case for “ temporar

y suspension of the re cognition and enfor ceme nt proce eding s . . . . consideringthat eff orts are beingmade with the c ompetent authorities of the State of Hondura s to seek an a

micable se ttlement by

mutual ag ree ment that best suits the interest of both parties.” Reply , Milla Decl. Ex. 2, DRC Temporary Suspension Request at 1, Fe b. 24, 2010. FHI S filed a re sponse, agree ing to a suspension of six ty

day s but asserting that afte r the c onclusion of that time, DRC “must file the proce eding s or make f inal withdrawa l of the pe tition.” Reply , Milla Aff. Ex. 3, FHI S Response to Temporar y Suspension Request at 1, Apr. 26, 2010. On April 30, 2010, the Hondur an Supreme Court gr anted DRC’s re quest and order ed a “ temporar

y suspension of the pre sent proce eding s under the c onditions and

rese rvations made” by

FHI S — which presumably includes the sixt y -day

limit ation on the temporar y suspension. Opp., Fa

rmer A ff Ex. G, Order

Gra nting Te mporary

Suspension Request at 1, Apr. 30, 2010. The ref ore, a fter sixty

day s had passe d, on J uly 2, 2010, FHI S submi tted a reque st to the Honduran Supre me Court that it procee d to adjudicate the matter be fore it. Reply , Milla Decl. Ex. 5, FHS Petition for Conti nuation at 1-2, July 2, 2010. Thus, this foreig n enfor ceme nt action is curr ently pendingin Honduras. Meanwhile, on J anuar

y 5, 2010 — two months after D RC filed its foreig n enfor ceme nt action but befor e DRC reque sted a tempora ry suspension of that ac tion — DRC

7filed a pa

rallel pe tition i n this Court. S ee Pet. at 1. DRC requests that this Court confirm the Awar d and conte nds that none of the grounds for r efusa l or defe rra l of rec og nition or enfor ceme nt apply . I d. at 6. In response , amongother motions, the Republic has filed a motion to stay or, in the alter

native, dismiss thi s action. See g ener ally Mot.

I I . L EGAL

STANDARD Actions to enfor ce f

oreig n arbitration awar ds are g overne d either by the Inter-A merica

n Convention on I nternational Comm erc ial Arbitration (“ Inter-A merica n Convention” or “Pana

ma Convention”) or

the Convention on Recognition and Enforc ement of For eig n Arbitral Aw ards ( “Ne w York Convention”) . See I N T E R -A M E R I C A N C O N V E N T I O N , J an. 30 1975, S. Treaty

Doc. No. 97- 12 (1981), 1438 U.N .T.S. 248; N E W Y O R K C O N V E N T I O N , J une 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 3. Her e, the pa rties ag ree that the Inter-A merica n Convention applies. See Pet. at 6; Mot. at 13-14 n.2; see also 9 U.S.C. § 305(1). B oth conventions, howe ver, “ ‘ar e intended to a chieve the same r esults, and their ke y provisions adopt the same standa

rds, phra sed in the leg al style appr opriate f or ea ch org anization.’” Ener g y Transp., Ltd. v. M.S. S an Sebastian, 348 F . Supp. 2d 186, 198 (S.D.N.Y. 2004) (quotingH.R. R E P . N O . 501, 101 S T C O N G ., 2 D S E S S 4 (1990), r eprinted in 1990 U.S.C.C.A.N. 675, 678); see also Interna

tional I ns. Co. v. Caja Nac ional de Ahor ro y Seguro, 293 F .3d 392, 396 n.9 (7th Cir. 2002) (notingthat various provisions of both conve ntions “are substantively identical”) . I t is there fore expected that fe dera l courts will achieve “‘a g ener al uniformity

of re sults under the two conventions.’” Energy

Transp., Ltd. v. M.S. S an Sebastian, 348 F . Supp. 2d at 198 (quoting H .R. R E P . N O . 501, 101 S T C O N G ., 2 D S E S S 4 (1990), r eprinted in 1990 U.S.C.C.A.N. 675, 678).

8Under 9 U.S.C. S ection 207, a c ourt “shall conf irm” a f oreig n arbitration awar d “unless it finds one of the g rounds for r efusa l or defe rra l of rec og nition or enforc ement of the

awa rd spec ified in” the Inter-America n Convention. 9 U.S.C. § 207; see 9 U .S.C. § 302 (providingthat “the Convention” r efe renc ed in 9 U.S.C. § 207 “shall mean the I nter-A merica

n Convention”). Unde r Article V(1) of the Inter-A merica

n Convention, such g rounds include: a. That the parties to the a g ree ment wer e subjec t to some incapa city

under the applicable law or that the ag ree ment is not valid under the law to which the pa rties have submitt ed it, or, if such law is not spec ified, under the law of

the State in which the decision wa s made; or b. That the pa

rty ag ainst which the a

rbitral dec ision has been made was not duly

notified of the a

ppointment of the arbitra

tor or of the arbitration procedur e to be f ollowed, or wa s unable, for any other rea sons, to present his defe nse; or c. That the decision conc erns a dispute not envisag ed in the ag ree ment betwee n the par ties to submit to arbitration; never theless, if the provisions of the de cision that ref er to issues submitt ed to ar

bitration can be separ ated f rom those not submitt ed to arbitration, the f

ormer ma y be re cog nized and executed; or d. That the c onstitut ion of the ar bitral tribunal or the a

rbitration proce dure ha s not been c arr ied out in acc ordanc e with the ter ms of the ag ree ment signe d by

the par ties or, in the abse nce of

such ag ree ment, that the constitution of the arbitra l tribunal or the arbitration procedur e has not be en ca rried out in ac corda

nce w ith the law of the State wher e the a

rbitration took place ; or e. That the decision is not y et binding on the parties or has bee n annulled or suspe nded by a compe tent authority

of that State in which, or a ccor ding to the la w of whic h, the dec ision has been made. I N T E R -A M E R I C A N C O N V E N T I O N , art. V( 1). Article V(2) se ts forth two additional g rounds, providing that

9rec og nition and execution of an ar bitral dec ision may

also be ref used if the c ompetent authority of the State in which the rec og nition and execution is requested finds: a. That the subject of the dispute c annot be se ttled by arbitration under the law of that State; or b. That the re cog nition or ex ecution of the decision would be contra ry to the public policy

. . . of that State. I N T E R -A M E R I C A N C O N V E N T I O N , art. V(2).

Finally , Article V Iof the Inter-A merica n Convention provides a c ourt with the discretion to “postpone a

decision on the e x ecution of the arbitra l decision” if ther e is a pe nding action in the State in which, or acc ording to the law of which, the ar bitral awa rd wa s made. I N T E R -A M E R I C A N C O N V E N T I O N , art. VI . In such ca se, Article VI further provides that a c ourt may , “at the r equest of the party reque sting e x ecution, . . . instruct the other party to provide appropr iate guara

nties.” I d.

I I I . DI SCUS SI ON I nvoking A rticle VI

of the Inter-A merica

n Convention, as well as this Court’s inhere nt authority

to control the disposition of its case s, the Republic of Hondur as conte nds that this action should be stay ed until after the final a djudication of three prior, pendingactions: (1) the United States’ FCA A ction ag ainst DRC, curre ntly pendingbefor e Judge Rober ts; (2) DRC’s ac tion ag ainst USAI D, Civil Action No. 04-940C, curre ntly stay ed in the Court of Fe dera l Claims; and (3) DRC’s foreig n action to enf orce the Awa

rd, cur rently pendingbefor e the Hondura n Supreme Court. See Mot. at 2, 10; see also Pet. Opp. at 2. The Re public asser ts that a stay will “foster judicia l economy , avoid duplication of e ffor t, promote judicial and the pa rties’

10eff

iciency and justice, a

nd preve nt inconsistent judgments, which ma y be emba rra ssing to the United States’ re lations with Honduras.” Mot. at 10.

More spe cifica lly , with respec t to the FCA Ac tion, the Republic arg ues that beca use the Aw ard “ is based on the same transa ctions and contra ct” a t issue in the FCA Ac tion, “[i] f the United States pr evails, DRC would be held to have committed fraud in c onnection with the under lying tr ansac tion and contra ct which would be g rounds to invalidate the a war d.” Mot. at 2. Wit h respe ct to the re levant ac tion in the Cl aims Court, the Republic argues that a stay is 4

nece ssary “to avoid a double rec overy .” I d. at 3. Fina lly , with respec t to DRC’s foreig n action to enfor ce the Awar d befor e the Hondur an Supreme Court, the Republic argues: “The Hondura s proce eding s are prior in time and will adjudicate whether the ar bitration awa

rd is enfor cea

ble ag ainst FHI S.” I d. Thus, the Republic conte nds that “[t] here is a g reat dang er of inconsistent judgme nts if this C ourt wer e to enf orce the awa

rd ag ainst the Republic, and then [J udg e Roberts]

wer e to hold that DRC defra uded USAI D and that the unde rlying a g ree ment is void, and/or the Hondura s courts we re to hold that the a war d is unenforc eable .” I d. DRC opposes the Republic’s motion for stay . First, DRC argues that the matter s raised in the F CA Action wer e addr essed a nd reje cted dur ing the arbitration. Opp. at 16. Thus, DRC contends that the ar bitration tribunal’s re

jection of a

ny alleg ed fr aud on DRC’s par t “is now final and binding .” I d. Second, DRC argues that the a ction in the Claims C ourt “will not decide

The United States ha s filed two statements of inter est in this case in support of the 4 Republic’s position with respect to the F CA Action. The g overnme nt asserts: “B eca use of the pendenc y of the F CA case and bec ause D RC has pled the arbitra tion awar d as an a ffirmative defe nse to its alleg ed fr aud, a r esolution of this matter should await the outcome of the F CA case in both this Court as well as in the Court of F eder al Claims.” First U.S. Statement at 3; see also Second U.S. Statement at 2-3. 11any

issues that are rele vant her e.” I d. at 18. Fina lly , DRC argues that its action bef ore the Hondura n Supreme Court “ha s been suspe nded and mig ht never result in a dec ision.” I d. at 15. The Court agree s with the Republic of Hondura s that this action should be stay ed in light of the pe ndency

of the prior , para llel action cur rently befor e the Hondur an Supreme Court, DRC, I nc. v. F ondo Hondure ño de Inversión Social, Case N o. 301-2009. Acc ording ly , 5 under A rticle VI

of the I nter-A merica

n Convention, the Court will ex erc ise its discretion and will postpone ruling on DRC’s petition.

This Court has previously set forth the f

rame work for

deter mining whe ther to postpone a de cision to enforc e an a rbitration awa

rd pursua nt to Article VI

of the Ne w York Convention. See Continental Transfe rt Tec hnique Ltd. v. Fede ral Gov’ t of Nig eria , 697 F. Supp. 2d 46, 59-60 (D.D .C. 2010). That fr amewor k is equally

applicable here g iven that the re levant text of Article VI

of the Inter-A merica

n Convention is subst antively identical to that of the N ew York Convention and that the two c onventions “‘a re intende d to achieve the same r esults.’” Energy Transp., Ltd. v. M.V. San Sebastian, 348 F. Supp. 2d at 198 ( quoting H.R. R E P . N O . 501, 101 S T C O N G ., 2 D S E S S 4 (1990), r eprinted in 1990 U.S.C.C.A.N. 675, 678); see also International Ins. Co. v. Caja Nac ional de Ahor ro y Seg uro, 293 F .3d at 396 n.9. Article V Iof the Inter-A merica n Convention give s the Court the discre tion to decide whether

an ac tion should be postponed — that is, stay ed or dismissed without prejudice

. See Continental Tra

nsfer t Technique L td. v. Fede ral Gov’ t of Nig eria , 697 F. Supp. 2d at 59. Although the United States Court of Appea ls for the District of Columbia Circuit has not y et had

The Court does not her ein dec ide — and ther efor e re serve s ruling on ( should such 5 ruling become nece ssary

) — whe ther this action should also be stayed until after final adjudication of the FCA Ac tion and the Claims Court action. 12occa sion to offer muc h g uidance reg ardingthe manner in which a district cour

t should “postpone” a ca se broug ht under the I nter-A merica

n Convention, “the Second Circ uit has addre ssed at leng th the issue of whe ther to adjourn a case to await the outcome of for eig n proce eding s.” I d. (citingEuropca r I talia, S.p.A. v. Maiellano Tour s, I nc., 156 F .3d 310, 316 (2d Cir. 1998)). A s this C ourt descr ibed:

I n consideringthe possibilit y of adjournme nt, a district court “ must take into acc ount the inhere nt tension betwee n competingconce rns.” Eur opcar I talia, S.p.A. v. Maiellano Tour s, I nc., 156 F .3d at 317. On the one hand, ther e is an “ emphatic fede ral policy

in favor of

arbitra l dispute resolution,” Ter morio S.A. E.S.P . v. Electra

nta S.P., 487 F.3d 928, 933 (D.C. Cir. 2007), and “the adjournment of e nforc ement proc eeding s impedes the g oals of ar

bitration — the expeditious resolution of disput es and the avoidanc e of pr otrac ted and e x pensive litigation.” Europca r I talia, S.p.A. v. Maiellano Tour s, I nc., 156 F .3d at 317. On the other ha nd, “whe re a

para llel proce edingis ongoingin the orig inating c ountry

and ther e is a possibility

that the awa

rd will be set aside, a

district court may

be ac ting improvidently

by enfor cing the awa rd prior to the c ompletion of the fore ign pr ocee dings.” I d. I n light of the competinginterests at stake when a district court is aske d to consider a djournment, the Second Circ uit sug g ests “seve ral fa ctors” tha t should be weig hed by

a cour t in deter mining whe ther to adjourn, inc luding: “(1) the g ener al objectives of arbitration — the expediti ous resolution of disputes and the a voidance of protra cted a

nd expensive liti g ation; (2) the status of the fore ign pr ocee dings a nd the estimated time for those proc eeding s to be resolve d; (3) whe ther the a

war d soug ht to be enfor ced w ill rece ive g reater scr

utiny in the fore ign pr ocee dings unde r a le ss defe rential standa

rd of r eview; (4) the c hara cter istics of the fore ign pr ocee dings, inc luding (i) whe ther they

wer e brought to enforc e an a war d (which

13would tend to weig h in favor of a stay ) or to set the a

war d aside (which would tend to weig h in favor of enfor ceme nt); (ii) whethe r they

wer e initiated bef

ore the underly

ing enfor ceme nt proce edingso as to raise c oncer ns of international c omity ; (iii) whether they wer e initiated by

the party now see king to e nforc e the a war d in fede ral c ourt; and (iv) whe ther they

wer e initiated under

circ umstances indicating an intent to hinder or de lay resolution of the dispute; (5) a balanc e of possible ha

rdships to eac h of the pa

rties . . . ; and (6) a ny other [releva

nt] circ umstances . . . .” Europca r I talia, S.p.A. v. Maiellano Tour s, I nc., 156 F .3d at 317-18. Continental Transfe rt Tec hnique L td. v. Fede ral Gov’ t of Nig eria , 697 F. Supp. 2d at 59-60 (alter ation in orig inal); see a lso Nedagro B .V. v. Z ao Konve rsbank, Civil Action No. 02-3946, 2003 WL 151997, at *5-7 (S.D.N.Y . J an. 21, 2003).

I n this case, the E uropca

r I talia fa ctors we igh in f

avor of a stay . The Aw ard w as rende red in the Republic of Hondura s by

Hondura n arbitrators under H onduran la w. Opp. at 8; Pet. Mem. at 6; Mot. at 13. On November 11, 2009, DRC filed a pe tition for acknowle dg ment and execution of the A war d befor e the Hondur an Supreme Court. See Opp. at 14; Mot. at 2; Mot., Urquiza Decl. Ex. 3, DRC’s P etition for Acknow ledg ment Be fore the Hondura n Supreme Court at 1, Nov. 11, 2009. Subsequently , on J anuar y 5, 2010, DRC broug ht a par allel ac tion in this Court. The fourth fa ctor ther efor e we ighs strong ly in favor of

postponement g iven (1) that DRC broug ht the fore ign pr ocee ding to enforcethe awa rd as we ll as the para llel action in this Court, and (2) that DRC’s action in Honduras wa s “initiated befor e the unde rlying e nforc ement proce eding ” in this Court “so as to raise c oncer ns of international comity .” Europc ar Italia,

14S.p.A. v. Maiellano Tours, Inc., 156 F .3d at 318. Compare N edagro B .V. v. Z ao Konve rsbank,

2003 WL 151997, at *7 (de fer ringdecision on petition in light of the pe ndency of for eig n enfor ceme nt proce eding s beca use “it wa s petitioner who first soug ht to enforc e its awa rd in the orig inating c ountry ”), w ith G.E. Transp. S.P.A. v. Republic of Albania , 693 F. Supp. 2d 132, 139 (D.D.C. 2010) ( confirmingarbitration awar d afte r taking“notice of the fa ct that the for eig n proce edingwas c ommenced” by the fore ign g overnme nt “to set aside the Arbitral Awa rd”)

. There fore , wher e — as he re — “ it is t he plaintiff who f irst sought to enf

orce his awar d in the orig inating c ountry , the ar g ument for e nforc ement by the plaintiff in the district cour t loses force beca use the possibility

of conf licting r esults and the conse quent offe nse to international c omity can be laid at the plaintiff’ s door.” Eur opcar I talia, S.p.A. v. Maiellano Tour s, Inc., 156 F .3d at 317. DRC argues, howe ver, that the fore ign e nforc ement ac tion before the Hondura n Supreme Court “ha s been suspe nded and mig ht never result in a dec ision,” Opp. at 15. Thus,

acc ordingto DRC, “the status of the for eig n proce eding s and the e stimated time for those proce eding s to be resolve d” we ighs a g ainst postponement. Europca r I talia, S.p.A. v. Maiellano Tours, Inc., 156 F .3d at 317. The Court finds this argument unpersua sive for two r easons. F irst, any delay with respec t the fore ign e nforc ement ac tion must also “be laid at the plaintiff’ s door,” Europca r Italia, S.p.A. v. Maiellano Tour s, I nc., 156 F .3d at 317, bec ause it wa s DRC that reque sted the suspension. See Reply , Milla Decl. Ex. 2, DRC Temporary Suspension Request at 1, Fe b. 24, 2010; see a lso Pet. Reply at 13. Second, on the r ecor d befor e it, the Court

6 DRC has provided two contr adictory explanations for reque sting the te mporary 6 suspension. I n its filing bef ore the Hondura

n Supreme Court, DRC asserte d that its request wa s made in an attempt to resolve problems by mutual ag ree ment of the pa rties. See Reply , Milla 15disag ree s with DRC’s chara cter ization of the status of the fore ign pr ocee dings. D RC’s request

was for a “ temporary suspension of the re cog nition and enforc ement proc eeding s.” Reply , Milla Dec l. Ex . 2, DRC Temporar y Suspension Request at 1, Fe b. 24, 2010 (empha sis added). F HI S filed a r esponse, a g ree ing to suc h a tempora ry suspension but assertingthat it should t erminate afte r six ty day s. Reply , Milla Aff. Ex. 3, FHI S Response to Temporar y Suspension Request at 1, Apr. 26, 2010. On A

pril 30, 2010, the Hondura n Supreme Court g rante d DRC’s reque st and order ed a “ temporary

suspension of the pre sent proce eding s under the c onditions and

reserv ations made ” by

FHI S — which presumably includes the sixt y -day

limit ation on the temporar y suspension. Opp., Fa

rmer A ff Ex. G, Order

Gra nting Te mporary

Suspension Request at 1, Apr. 30, 2010 ( emphasis adde d). Ther efor e, af ter sixt y day s had passe d, on J uly 2, 2010, FHI S submi tted a re quest to the Hondura n Supreme Court that it proce ed to adjudicate the matter befor e it. Reply , Milla Decl. Ex. 5, FHS Petition for Conti nuation at 1-2, July 2, 2010. The Court there fore finds that it would be “ac ting improvidently by enfor cingthe

awa rd prior to the c ompletion of the fore ign pr ocee dings” in Honduras. Eur opcar I talia S.p.A. v. Maiellano Tour s, I nc., 156 F .3d at 317. B eca use DRC petitioned the Hondura n Supreme Court

Dec l. Ex . 2, DRC Temporar y Suspension Request at 1, Fe b. 24, 2010 (DRC reque sted the temporar y suspension “considering tha t effor ts are be ing ma de with the compe tent authorities of the State of Hondur as to seek a n amicable settlement by

mutual ag ree ment that best suits the interests of both par

ties”). In this Court, however, DRC asser ts that its request was made to preve nt unspecified H onduran of ficials fr om placingimproper pr essure on members of the Hondura n Supreme Court. See O pp., Fa rmer A ff. ¶

12, J une 21, 2010 (D RC requested the temporar y suspension beca

use it rec eived “ information . . . consider ed to be r eliable that members of

the Hondura

n Gover nment wer e attemptingto influence the outcome of the Supreme Court action by

putting improper

pressure on members of

the Supreme Court to rule a g ainst DRC.”). 16to rec og nize and enfor ce the Awar d issued in Honduras pur suant to Honduran la w prior to initiating its action in this C ourt,

it is better to permit the validity of this [ Hondura

n] arbitral awa

rd to be first tested unde r [Honduran] law by [Honduran] courts. That is prefe rable to an Amer ican c ourt seekingto apply the law of

the fore ign c ountry

wher e the a

war d was made , and ente ring an orde r enfor cingan aw ard later c ondemned by the cour ts of that fore ign country

. Spier v. Calzaturificio Tec nica S.p.A., 663 F . Supp. 871, 875 (S.D.N.Y. 1987); see also Neda g ro B.V . v. Z ao Konve rsbank, 2003 WL 151997, at *7 (de fer

ring decision on a pe tition t o confirm a n arbitration awar d in light of the pe ndency of a pa rallel for eig n action commenc ed by petitioner to confirm the a

war d); Fe rtiliz er Corp. of India v. I DI

Mg mt., Inc., 517 F . Supp. 948, 961-62 (S.D. Ohio 1981). Ac cording ly , the Court will gr ant the Republic’s motion to stay and will postpone ruling on DRC’s petition in l ight of the pende ncy

of the prior , para llel action bef ore the Hondura n Supreme Court, DRC, I nc. v. F ondo Hondure ño de I nversión Social, Case No. 301-2009. One f

inal matter re quires discussion. Article V I of the Inter-A merica

n Convention provides that the Court may , “at the r equest of the party reque sting e x ecution, . . . instruct the other pa

rty to provide appr opriate guara nties.” I

N T E R -A M E R I C A N C O N V E N T I O N , art. VI . Invoking this provision of Ar ticle VI , DRC has reque sted a guara nty : “[I ]f the Court postpones enfor ceme nt, DRC requests that the Republic be or dere d to post appropriate g uara nties, equal to the amount of the Awa rd, plus interest.” Pet. Reply at 13. The Court will not require the Republic of Hondur as — a sove reign state that pre sumably is solvent and will comply with leg itimate orders issued by courts in this country

or in Hondura s — to post any g uara nty in this case. 17I V. CONCLUSI ON For the fore g oing r easons, the Re public of Hondura s’ motion to st ay [Dkt. No. 11] is GRANTED. An Or der c onsistent with thi s Opinion shall issue this same da y . SO ORDERED. /s/ PAULL . FRI EDMAN DATE: Mar ch 28, 2011 United States District J udg e

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