Opinion ID: 785472
Heading Depth: 2
Heading Rank: 2

Heading: Swedish Arbitration Proceedings

Text: 7 Disputes eventually arose between Noga and the Government regarding performance of the Loan Agreements. In December 1992, Noga declared the Government to be in default, claiming that it owed Noga $300 million in principal and interest. In April 1993, Noga terminated the agreements and accelerated payment on the loans. In June 1993, Noga filed a Request for Arbitration with the Stockholm Chamber of Commerce, seeking over $275 million for unpaid balances, plus consequential damages. Noga's Arbitration Request identified the Russian Federation as the respondent and explained that its decision to do so was based on the facts that (i) [b]oth the `buying' and the `selling' Agencies `[were]' the Russian Federation, i.e. under the [Russian Federation's] control; (ii) [a]ll contracts between [Noga] and the Agencies [made] express reference to the contracts entered into by Noga and the Russian Federation, since such contracts represent[ed] the performance of the Loan Agreements; and (iii) [t]he Russian Federation guaranteed performance by the `selling' Agencies for repayment of the Loans. 8 The Russian Federation made no response to the Arbitration Request. Instead, attorneys representing the Government objected to Noga naming the Russian Federation as the respondent and requested that the arbitrators require Noga to amend its Arbitration Request to name the Government and the state agencies that had signed the contracts as the proper respondents. In response, Noga argued that the arbitrators should overrule the Government's objection on the ground that the Russian Federation and the Government were the same legal person and thus the Government's acts were directly attributable to the Russian Federation. The arbitrators never ruled on the Government's objection, and Noga never sought judicial intervention to compel the Russian Federation to participate in the arbitration. 9 Eight years of arbitration proceedings followed. The arbitration was conducted in two phases. Phase I related to liability and damages, except for consequential damages; Phase II related to consequential damages. Throughout the arbitration proceedings, the Government — and not the Russian Federation — appeared and arbitrated with Noga.
10 At the conclusion of Phase I, the arbitrators issued two awards, both of which are the subject of this appeal. In the first award, dated February 1, 1997, the tribunal determined that Noga had been justified in both declaring a default and in accelerating the remaining oil deliveries. The arbitrators awarded Noga approximately $23 million in damages, plus accrued interest from April 1993 until the date of payment. On May 15, 1997, the tribunal issued a supplemental award, which increased the amount of the earlier award by approximately $4 million for management fees that Noga had alleged were omitted from the first award. Together, the two awards (collectively, the Phase I Award) totaled approximately $50 million, including interest through May 1997. The caption of the arbitration awards refers to the respondent as the Government of the Russian Federation (Russia) Throughout the awards, however, the arbitrators refer interchangeably to the Government of the Russian Federation, the Russian Federation, and Russia. 11 The Government appealed the supplemental award to the District Court of Stockholm, which dismissed the appeal and awarded attorneys' fees and costs to Noga. The caption contained in the Swedish court's decision identified the Russian Federation, the Ministry of Finance as the plaintiff. The court's decision repeatedly refers to the plaintiff as the Russian Federation, although the issue of which entity was the proper party was not before it, and it was not being asked to confirm the Phase I Award. The Stockholm District Court's decision was affirmed by the Svea Court of Appeal, which also referred to the Russian Federation in both the caption and text of its decision and awarded Noga additional attorneys' fees and costs. 4 Neither the Russian Federation nor the Government has paid the Phase I Award.
12 On March 13, 2001 (while the actions giving rise to this appeal were pending), the arbitrators issued an award finding that Noga was entitled to approximately $25.3 million in consequential damages, plus interest that had accrued during the eight years since the Arbitration Request had been filed. As of the date the briefs in this appeal were filed, an appeal of the Phase II Award was still pending in the Swedish courts, and Noga had not yet sought to confirm or enforce this award. 13