Northrop Grumman v. Ministry of Defense, et al
Filing
406
Memorandum Opinion and ORDER Granting Plaintiff Northrop Grumman Ship Systems, Inc.'s Motion 391 for Recognition and Execution of Arbitration Award. Signed by District Judge Halil S. Ozerden on March 31, 2020. (AW)
Case 1:02-cv-00785-HSO-RHW Document 406 Filed 03/31/20 Page 1 of 16
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
NORTHROP GRUMMAN SHIP
SYSTEMS, INC., formerly known as
Ingalls Shipbuilding, Inc.
PLAINTIFF
SIDNEY A. BACKSTROM, SCRUGGS
LAW FIRM, P.A., RICHARD F. SCRUGGS,
ZACH SCRUGGS, PODHURST ORSECK,
P.A., ATTORNEY GEORGE SHADDOCK
v.
INTERVENOR PLAINTIFFS
Civil No. 1:02cv785-HSO-RHW
THE MINISTRY OF DEFENSE OF THE
REPUBLIC OF VENEZUELA
DEFENDANT
THE MINISTRY OF DEFENSE OF THE
REPUBLIC OF VENEZUELA
COUNTER-CLAIMANT
v.
NORTHROP GRUMMAN SHIP
SYSTEMS, INC.
COUNTER-DEFENDANT
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF
NORTHROP GRUMMAN SHIP SYSTEMS, INC.’S MOTION [391] FOR
RECOGNITION AND EXECUTION OF ARBITRATION AWARD
BEFORE THE COURT is Plaintiff Northrop Grumman Ship Systems, Inc.’s,
formerly known as Ingalls Shipbuilding, Inc., Motion [391] for Recognition and
Execution of Arbitration Award. Defendant The Ministry of Defense of the Republic
of Venezuela has filed a Response [400], to which Plaintiff has replied. Because the
Court finds that no grounds exist for refusing or deferring recognition of the
arbitration award, Plaintiff Northrop Grumman Ship Systems, Inc.’s Motion [391]
1
Case 1:02-cv-00785-HSO-RHW Document 406 Filed 03/31/20 Page 2 of 16
for Recognition and Execution of Arbitration Award should be granted, and the
award should be enforced.
I. BACKGROUND
A.
The parties’ contract
On or about December 18, 1997, Plaintiff Northrop Grumman Ship Systems,
Inc., f/k/a Ingalls Shipbuilding, Inc., now known as Huntington Ingalls Incorporated
(“Plaintiff” or “Huntington Ingalls”), entered into a contract with The Ministry of
Defense of the Republic of Venezuela (“Defendant” or “Ministry”) for the
refurbishment of two frigates for the Venezuelan Navy (the “Contract”).
Huntington Ingalls Ex. 4, Contract [391-4] at 3. The Contract was worth
$315,000,000.00, id. at 11, and contained an arbitration clause which provided in
relevant part that:
Should a dispute or breach or interpretation issue arise in connection
with this Contract, “THE CONTRACTOR” and “THE MINISTRY” shall
get together and negotiate in good faith [to] resolve the matter in a
friendly manner. Should the parties fail to resolve the matter within
thirty (30) calendar days of the emergence of the dispute, then at the
request of either party, the matter shall be submitted for arbitration
according to this Clause. Should the matter still not be resolved through
arbitration, the parties shall be entitled to resort to the competent
Courts of the Republic of Venezuela. 1
Id. at 80-81.
The arbitration clause further stated that “[a]ny arbitration under this Contract
shall take place in Caracas, Venezuela. The parties agree that in the case of
The Contract’s official language was Spanish. See generally Huntington Ingalls Ex. 3, Contract
[391-3]. English quotations are taken from a translation of the Contract. Huntington Ingalls Ex. 1,
Yanos Decl. [391-1] at 2; see generally Huntington Ingalls Ex. 4, Translation of Contract [391-4].
1
2
Case 1:02-cv-00785-HSO-RHW Document 406 Filed 03/31/20 Page 3 of 16
arbitration, they will abide by the rules contained in the Civil Procedure Code of
Venezuela.” Id. at 81. Finally, “[n]o amendment to this Contract shall be valid,
unless made through written documents signed by the contracting parties with the
approval of the General Controller’s Office of the National Armed Forces. Such
modifications shall be an integral part of the contractual instrument.” Id. at 84.
At some point after signing the Contract, Huntington Ingalls asserts that a
dispute arose between the parties relating to payment for additional work on the
frigates which they were unable to resolve amicably. Mem. in Supp. [392] at 2.
B.
Procedural history
This dispute has a lengthy procedural history, beginning when Huntington
Ingalls filed a Complaint in this Court on October 24, 2002, Compl. [1], and moved
to compel arbitration, Mot. to Compel [29]. On April 16, 2003, this Court granted
Huntington Ingalls’ Motion to Compel Arbitration and stated that it “will retain
jurisdiction . . . to resolve disputes relating to this Order and to enforce any arbitral
award.” Order [43]. The Court appointed an arbitrator on behalf of the Ministry,
see id. at 3, and ordered that the arbitration proceed in Mississippi or at another
location in the United States of America due to the political situation in Venezuela,
see id. at 2.
The Parties agree that the initial arbitral tribunal was ultimately formed in
Mexico City under the Inter-American Commercial Arbitration Commission Rules
(“Mexico City Arbitration”). Mem. in Supp. [392] at 3; Mem. in Opp’n [400] at 3. On
January 30, 2004, the Ministry formally appeared in this Court for the first time
3
Case 1:02-cv-00785-HSO-RHW Document 406 Filed 03/31/20 Page 4 of 16
and moved to vacate the Order [43] Compelling Arbitration and to dismiss
Huntington Ingalls’ Complaint for lack of subject-matter jurisdiction. Mot. to
Vacate & Dismiss [45] at 3. It also objected to any arbitration occurring outside of
Caracas, Venezuela, and sought a suspension of the Mexico City Arbitration. Id. at
4
On March 31, 2005, this Court stayed the Mexico City Arbitration while it
considered the Ministry’s Motion 2. Order Staying Arbitration [60]. On October 5,
2005, the Court entered an Order [65] of Dismissal, Order [65], followed by an
Amended Order [66] of Dismissal on October 11, 2005, based upon the parties’
representations that they had settled the case, Am. Order [66]. The Court retained
jurisdiction to enforce the settlement, id., and on October 19, 2005, the Ministry
contested that a settlement existed and requested that the Amended Order [66] of
Dismissal be vacated, Mot. to Vacate [68] at 1. On September 24, 2007, the Court
denied the Ministry’s Motion to Dismiss, Mem. & Opinion [116] at 5, and upheld the
settlement agreement, id. at 10. The Ministry then appealed to the United States
Court of Appeals for the Fifth Circuit. Notice of Appeal [127].
On July 9, 2009, the Fifth Circuit vacated the judgment enforcing the
settlement agreement and ruled that the termination of the Mexico City Arbitration
had mooted the original order compelling arbitration. Northrop Grumman Ship
Systems, Inc., et al. v. The Ministry of Defense of the Republic of Venezuela, 575 F.3d
The Mexico City Arbitration discontinued its proceedings on November 27, 2008, because it had
been suspended for more than three years and eight months and lifting of the suspension was “not
foreseen in the near future.” Huntington Ingalls Ex. 5, Arbitral Tribunal Termination Order [391-5]
at 3.
2
4
Case 1:02-cv-00785-HSO-RHW Document 406 Filed 03/31/20 Page 5 of 16
491, 502 (5th Cir. 2009). The Court of Appeals remanded the case to this Court to
determine whether to compel arbitration a second time. Id. at 503.
On remand, the parties each sought to compel arbitration in a different
forum. The Ministry demanded arbitration in Venezuela, Ministry’s Mot. to Compel
[157], while Huntington Ingalls sought to compel arbitration in Mississippi,
Huntington Ingalls’ Cross Mot. to Compel [160]. On December 4, 2010, the Court
issued an Order compelling arbitration, but found that the contractual forum
selection clause specifying arbitration in Venezuela should not be enforced because
the political situation at the time was such that Huntington Ingalls would
essentially be deprived its day in court if forced to arbitrate there. Order [227] at 9.
The Court directed the parties to jointly agree upon an alternate location to conduct
the arbitration and advised that it would “retain jurisdiction in order to bring this
matter to conclusion after arbitration.” Id.
The Ministry appealed this Order, Notice of Appeal [230], but the Fifth
Circuit dismissed the appeal for lack of jurisdiction on March 23, 2011, see Northrop
Grumman Ship Sys., Inc. v. Ministry of Def. of the Republic of Venezuela, No. 1160001, 2011 U.S. App. LEXIS 26921 (5th Cir. Mar. 23, 2011) (granting appellee’s
motion to dismiss appeal), reh’g denied (5th Cir. May 9, 2011) (per curiam).
On March 30, 2011, the parties agreed upon Washington, D.C., as the place of
arbitration. Min. Entry, Mar. 30, 2011. The Ministry asserts that it felt compelled
to agree to Washington, D.C., as the location for the arbitration because the Court
had indicated that it would choose the location if the parties did not agree upon one.
5
Case 1:02-cv-00785-HSO-RHW Document 406 Filed 03/31/20 Page 6 of 16
Mem. in Opp’n [400] at 5. The parties each selected an arbitrator. Ministry’s
Notice of Appointment [249]; Huntington Ingalls’ Notice of Appointment [250]. In
making its appointment, the Ministry clarified that it did so
subject to and without waiver of any and all of contractual, arbitral and
litigation rights it has heretofore asserted, including, but not limited to,
its right to request enforcement of the December 1997 Contract as
written. Further, the Republic expressly reserves the right to challenge
the District Court’s Orders of December 4, 2010 [Doc. 227] and March
10, 2011 [Doc. 241], as it is presently doing before the U. S. Court of
Appeals for the Fifth Circuit in Case No. 11-60296, and as it may do at
any other appropriate time and in any other appropriate proceeding
and/or forum.
Ministry’s Notice of Appointment [249].
The arbitration proceeding was convened in Washington, D.C., see Min.
Entry, Mar. 30, 2011; Huntington Ingalls Ex. 6, Tribunal’s Procedural Order No. 2
[391-6] at 31, and administered by the Court of Arbitration of the International
Chamber of Commerce (“Tribunal”), Huntington Ingalls Ex. 6, Tribunal’s
Procedural Order No. 2 [391-6] at 3. The Ministry raised multiple preliminary
procedural challenges before the Tribunal, including: (1) an objection to the
jurisdiction of the Tribunal, id. at 17-19; and, alternatively, (2) a request that the
Tribunal change the legal seat of the arbitration back to Caracas, Venezuela, id. at
30-32. On July 16, 2013, the Tribunal rejected the Ministry’s challenges and found
that it had jurisdiction to hear the dispute, id. at 25, and that there had been a
valid modification of the forum selection clause, id. at 34.
In the end, the Tribunal concluded that the parties’ conduct before this Court
served to amend the Contract’s arbitration clause but that Venezuela’s repudiation
6
Case 1:02-cv-00785-HSO-RHW Document 406 Filed 03/31/20 Page 7 of 16
of its agreement to move the legal seat of the arbitration to Washington, D.C.,
required it to equitably reform the Contract further and establish a neutral legal
seat outside of Venezuela and the United States. Id. To safeguard the neutrality
and integrity of the arbitration proceedings, the Tribunal concluded that the legal
seat of the arbitration should be changed to Rio de Janeiro, Brazil. Id. at 35.
The arbitration was conducted on the merits from January 12-18, 2015, in
Rio de Janeiro, Brazil. Huntington Ingalls Ex. 2, Final Award [391-2] at 25. On
February 19, 2018, the Tribunal issued its Award. Id. at 355. As stated in the
Award, the Tribunal found that: (1) Huntington Ingalls had performed work outside
of the scope of the Contract for which it was entitled to compensation of
$42,303,312.50; (2) delays caused by the Ministry’s conduct entitled Huntington
Ingalls to additional compensation of $16,755,862.50; (3) delays caused by
Huntington Ingalls’ conduct entitled the Ministry to compensation of
$13,900,000.00; (4) Huntington Ingalls was entitled to interest at a rate of 8.713%
computed from April 5, 2002, to the date of actual payment of the Award; (5) the
Ministry was entitled to interest at a rate of 8.713% computed from March 10, 2011;
and (6) Huntington Ingalls was entitled to arbitration costs of $672,501.71
(collectively “Award”). Id at 348-52. The net value of the Award, after offsetting
sums due the Ministry against sums due to Huntington Ingalls, and including
interest until the date of the Award, was $128,862,457.27 in favor of Huntington
Ingalls, not including post-Award interest. See id. at 352.
7
Case 1:02-cv-00785-HSO-RHW Document 406 Filed 03/31/20 Page 8 of 16
On April 5, 2018, the Ministry submitted a Request for Correction of the
Award, which the Tribunal rejected as untimely. Huntington Ingalls Ex. 8,
Decision on the Ministry’s Request for Correction of the Arbitral Award [391-8] at
10. In its decision, the Tribunal clarified that it had moved the legal seat—and not
just the venue—of the arbitration to Rio de Janeiro, Brazil. Id.
On February 27, 2018, Huntington Ingalls filed a petition before the United
States District Court for the District of Columbia seeking to enforce the Tribunal’s
Award. Huntington Ingalls’ Petition to Confirm Arbitration Award, Huntington
Ingalls Inc. v. Ministry of Defense, 1:18-cv-00469 (D.D.C. Feb. 27, 2018). The
Ministry filed a motion to dismiss the petition on July 13, 2018, arguing that the
court lacked subject-matter jurisdiction. Huntington Ingalls Ex. 9, Ministry’s Mot.
to Dismiss, (D.D.C. July 13, 2018) [391-9] at 13. The district court held a hearing
on the Ministry’s Motion to Dismiss on February 13, 2019, and following additional
briefing, on June 13, 2019, it dismissed Huntington Ingalls’ Petition to Enforce the
Award on grounds that this Court had “intended to retain jurisdiction over the postarbitration proceedings, including enforcement of the arbitration award.”
Huntington Ingalls Ex. 12, Memorandum Opinion (D.D.C. June 13, 2019) [391-12]
at 19, 23.
On June 26, 2019, Huntington Ingalls filed the instant Motion [391] before
this Court for Recognition and Execution of Arbitration Award. Mot. for
Recognition [391]. The Ministry filed a Response in Opposition on July 10, 2019,
8
Case 1:02-cv-00785-HSO-RHW Document 406 Filed 03/31/20 Page 9 of 16
Resp. in Opp’n [399], to which Huntington Ingalls replied on July 17, 2019, Rebuttal
[402].
Huntington Ingalls contends that the Court should recognize and enforce the
Tribunal’s Award under Section 207 of the Federal Arbitration Act (“FAA”), 9
U.S.C. §§ 301-307, because none of the grounds for refusal of recognition and
enforcement under the Panama Convention, made applicable by operation of
Federal Arbitration Act Section 302, are present here. Mem. in Supp. [392] at 1216. The Ministry responds that the Award should not be enforced because the
Tribunal held the proceedings in Rio de Janeiro, Brazil, as opposed to Washington,
D.C, the parties’ agreed upon seat of arbitration3. Mem. in Opp’n [400] at 13.
II. DISCUSSION
A.
Standard of review
Both Huntington Ingalls and the Ministry agree that the Panama Convention
governs the issue of the recognition of the Award. Mem. in Supp. [392] at 11; Mem.
in Opp’n [400] at 9. However, the parties disagree with regard to what standard of
review is required under the Panama Convention. Huntington Ingalls contends
that the arbitrator’s decision should be given “considerable deference” and that this
Court’s review should be “extraordinarily narrow and exceedingly deferential.”
Mem. in Supp. [392] at 9 (quoting BG Group v. Republic of Argentina, 134 S. Ct.
The Ministry also argues at length regarding the Tribunal’s decision to arbitrate outside of the
contractually negotiated forum, Venezuela. Mem. in Opp’n [400] at 12-15, 17-18. This Court has
already addressed the issue of the impracticability of conducting an arbitration in Caracas,
Venezuela, Order [227] at 9, and the parties agreed to move the seat of arbitration of Washington,
D.C, Min. Entry, Mar. 30, 2011. These issues have already been litigated and resolved. The Court
declines to revisit them at this late stage of the proceeding.
3
9
Case 1:02-cv-00785-HSO-RHW Document 406 Filed 03/31/20 Page 10 of 16
1198, 1210 (2014) and Prestige Ford v. Ford Dealer Computer Servs., Inc., 324 F.3d
391, 392 (5th Cir. 2003)). The Ministry asserts that the Panama Convention sets a
de novo standard of review for an arbitration award where the arbitrator goes
beyond the scope of the arbitration agreement, as it contends happened in this case.
Mem. in Opp’n [400] at 9-10 (citing Polimaster Ltd. v. RAE Systems, Inc., 623 F.3d
832, 836 (9th Cir. 2010)). To determine the proper standard of review of an
international arbitration award, the Court must briefly discuss the relevant
international treaties.
The parties agree that the Inter-American Convention on International
Commercial Arbitration (“Panama Convention”) and its implementing legislation,
Chapter 3 of the Federal Arbitration Act, govern this dispute. Mem. in Supp. [392]
at 11; Mem. in Opp’n [400] at 9. Title 9, United States Code, Section 302, makes
Title 9, United States Code, Sections 202 through 207 applicable “to this chapter as
if specifically set forth herein.” 9 U.S.C. § 302. These provisions are the
implementing legislation for the June 10, 1958, New York Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”).
The parties have both conceded, and other courts have recognized, that for
questions of enforcement of an arbitration award, interpretations of the Panama
Convention and New York Convention (collectively “Conventions”) are applicable to
one another. Mem. in Opp’n [400] at 9 (citing TermoRio S.A. E.S.P. v. Electranta,
S.P., 487 F.3d 928, 933 (D.C. Cir. 2007) and Productos Mercantiles E Industriales,
10
Case 1:02-cv-00785-HSO-RHW Document 406 Filed 03/31/20 Page 11 of 16
S.A. v. Faberge USA, Inc., 23 F.3d 41, 45 (2d Cir. 1994)); Reply in Supp. [403] at 4
(citing Corporacion Mexicana de Mantenimiento Integral, S. de R.L. de C.V.
v. Pemex-Exploracion y Produccion, 962 F. Supp. 2d 642, 653 (S.D.N.Y. 2013), aff’d,
832 F.3d 92 (2d Cir. 2016) and EGI-VSR, LLC v. Mitjans, No. 15-20098-Civ-Scola,
2018 U.S. Dist. LEXIS 92714, at *4 n. 1 (S.D. Fla. May 31, 2018)).
Under the Conventions, there are two kinds of jurisdiction a country may
exercise over an arbitral award: primary or secondary. Karaha Bodas Co. v.
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 364 F.3d 274, 287-88
(5th Cir. 2004). “The country in which, or under the [arbitration] law of which, [an]
award was made” is said to have primary jurisdiction, while all other signatory
states are secondary jurisdictions. Id. at 287. Courts in countries with secondary
jurisdiction over an arbitral award may only decide whether the award may be
enforced in that country. Id. In this case, the arbitral Tribunal convened in Brazil,
Huntington Ingalls Ex. 6, Tribunal’s Procedural Order No. 2 [391-6] at 35, and was
governed by Venezuelan arbitration law, Huntington Ingalls Ex. 4, Contract [391-4]
at 81. It is clear that this Court has secondary jurisdiction and need only decide
whether to enforce the Award in the United States. See Karaha Bodas Co., 364 F.3d
at 287-88.
A court with secondary jurisdiction must enforce an arbitration award unless
it finds one of the grounds for refusal or deferral of recognition or enforcement that
are specified in the Conventions. Id. A court may not refuse to enforce an arbitral
award solely on the ground that the arbitrator may have made a mistake of law or
11
Case 1:02-cv-00785-HSO-RHW Document 406 Filed 03/31/20 Page 12 of 16
fact, and “[a]bsent extraordinary circumstances, a confirming court is not to
reconsider an arbitrator’s findings.” Id. The party defending against enforcement
of the arbitral award bears the burden of proof. Id. Defenses to enforcement under
the Conventions are construed narrowly, “to encourage the recognition and
enforcement of commercial arbitration agreements in international contracts . . . .”
Id. The Court concludes that the correct standard of review, as stated by
Huntington Ingalls, is that this Court must give the Tribunal’s decision
“considerable deference.” See BG Group, 134 S. Ct. at 1210.
B.
Defenses to enforcement
The Panama Convention offers the following defenses to enforcement:
1. The recognition and execution of the decision may be refused, at the
request of the party against which it is made, only if such party is able
to prove to the competent authority of the State in which recognition and
execution are requested:
a. That the parties to the agreement were subject to some
incapacity under the applicable law or that the agreement is not
valid under the law to which the parties have submitted it, or, if
such law is not specified, under the law of the State in which the
decision was made; or
b. That the party against which the arbitral decision has been
made was not duly notified of the appointment of the arbitrator
or of the arbitration procedure to be followed, or was unable, for
any other reason, to present his defense; or
c. That the decision concerns a dispute not envisaged in the
agreement between the parties to submit to arbitration;
nevertheless, if the provisions of the decision that refer to issues
submitted to arbitration can be separated from those not
submitted to arbitration, the former may be recognized and
executed; or
d. That the constitution of the arbitral tribunal or the arbitration
procedure has not been carried out in accordance with the terms
of the agreement signed by the parties or, in the absence of such
agreement, that the constitution of the arbitral tribunal or the
12
Case 1:02-cv-00785-HSO-RHW Document 406 Filed 03/31/20 Page 13 of 16
arbitration procedure has not been carried out in accordance with
the law of the State where the arbitration took place; or
e. That the decision is not yet binding on the parties or has been
annulled or suspended by a competent authority of the State in
which, or according to the law of which, the decision has been
made.
2. The recognition and execution of an arbitral decision may also be
refused if the competent authority of the State in which the recognition
and execution is requested finds:
a. That the subject of the dispute cannot be settled by arbitration
under the law of that State; or
b. That the recognition or execution of the decision would be
contrary to the public policy ("ordre public") of that State.
Panama Convention, Art. V.
The only relevant argument the Ministry advances to support its position
that the Court should refuse to enforce the Award is that the Tribunal did not
comply with the terms of the arbitration agreement because it conducted the
arbitration in Rio de Janeiro, Brazil, which was not the contractually negotiated
forum in violation of Article V(1)(d) of the Panama Convention4. Mem. in Opp’n
[400] at 15-17. Huntington Ingalls counters that under the Venezuelan Commercial
Arbitration Law, which governs the terms of the Contract, an arbitral tribunal may
determine the place of arbitration if the parties’ agreement fails. Mem. in Supp.
[403] at 6 (citing Huntington Ingalls Ex. 3, Venezuelan Commercial Arbitration
Law [402-3] at 9). It reasons that because this Court found that the parties’ choice
of forum was no longer enforceable, Order [227] at 9, the Tribunal was within its
authority to move the seat of arbitration, Mem. in Supp. [403] at 7.
As previously discussed, supra I at 9 n. 3, the Ministry also raises arguments which have already
been resolved by this Court in its Order [227] at 9, and need not be addressed again.
4
13
Case 1:02-cv-00785-HSO-RHW Document 406 Filed 03/31/20 Page 14 of 16
The parties concur that Article 9 of the Venezuelan Commercial Arbitration
Law governs the resolution of this issue. Mem. in Opp’n [400] at 16; Reply in Supp.
[403] at 6. Under this provision, the parties were free to determine the place of
arbitration. Huntington Ingalls Ex. 3, Venezuelan Commercial Arbitration Law
[402-3] at 9. However, if the parties cannot agree Venezuelan law is clear that “the
place of arbitration will be determined by the arbitral tribunal . . .” Id.
The Ministry contends that if the Court accepts that the parties agreed to
arbitrate in Washington, D.C., then the arbitral Tribunal was without the power to
change the seat of arbitration. Mem. in Opp’n [400] at 16. Ingalls argues that
while the parties initially agreed to arbitrate in Washington, D.C., the Ministry
later objected to arbitrating the dispute in that location, thus waiving this
argument. Reply in Supp. [403] at 7. The Court agrees.
It is clear from this Court’s March 30, 2011, Minute Entry, and there can be
no serious dispute, that Huntington Ingalls and the Ministry initially agreed to
arbitrate in Washington, D.C. Min. Entry, Mar. 30, 2011. Thereafter, arbitration
proceedings were convened in Washington, D.C. See Min. Entry, Mar. 30, 2011;
Huntington Ingalls Ex. 6, Tribunal’s Procedural Order No. 2 [391-6] at 31. The
Ministry raised multiple preliminary procedural challenges before the Tribunal in
Washington, D.C., including: (1) an objection to the jurisdiction of the Tribunal, id.
at 17-19; and alternatively, (2) a request that the Tribunal change the legal seat of
the arbitration back to Caracas, Venezuela, id. at 30-32. In the end, the Tribunal
concluded that the Ministry’s repudiation of its agreement to move the legal seat of
14
Case 1:02-cv-00785-HSO-RHW Document 406 Filed 03/31/20 Page 15 of 16
the arbitration to Washington, D.C., required it to equitably reform the Contract
further and establish a neutral legal seat outside of Venezuela and the United
States. Id. at 34. It then changed the legal seat of the arbitration to Rio de Janeiro,
Brazil. Id. at 35.
The record is clear that Huntington Ingalls and the Ministry initially agreed
upon arbitration in Washington, D.C., and the Ministry later repudiated this
agreement. It was reasonable for the Tribunal to conclude that there was no
agreement on the location for the arbitration at that point in the process. It was
also permissible and reasonable under Venezuelan law for the Tribunal to move the
seat of the arbitration proceedings to another location, including Rio de Janeiro,
Brazil. Article V(1)(d) of the Panama Convention permits this Court to decline to
enforce an arbitration award when the “procedure has not been carried out in
accordance with the terms of the agreement signed by the parties.” Panama
Convention, Art. V(1)(d). Here, the record reflects that the Tribunal complied with
the terms of the Contract when it adhered to Venezuelan law in determining
whether to change the legal seat of arbitration. Thus, there is no evidence that this
constitutes the “extraordinary circumstance” where the Court should “reconsider an
arbitrator’s findings.” Karaha Bodas Co., 364 F.3d at 288. As such, the Ministry
has not carried its burden of proof and has not demonstrated that the Award should
not be enforced. This Court should recognize and enforce the Award of the
Tribunal.
15
Case 1:02-cv-00785-HSO-RHW Document 406 Filed 03/31/20 Page 16 of 16
III. CONCLUSION
IT IS, THEREFORE, ORDERED AND ADJUDGED that, Plaintiff
Northrop Grumman Ship Systems, Inc.’s Motion [391] for Recognition and
Enforcement of Arbitration Award is GRANTED.
IT IS, FURTHER, ORDERED AND ADJUDGED that, the Court
recognizes and executes the Tribunal’s arbitration Award of February 19, 2018,
against The Ministry of Defense of the Republic of Venezuela. The amount of
judgment shall be equal to:
(i) The net amount of the Tribunal’s Award, including interest until the date
of the Award, in the amount of $128,862,457.27;
(ii) Post-award interest at 8.713% from the date of the Award until the date
of this Order, in the amount of $864,539.50;
(iii) Post-judgment interest, pursuant to 28 U.S.C. § 1961, from the date of
entry of final judgment in this case; and
(iv) Costs and fees.
SO ORDERED AND ADJUDGED, this the 31st day of March, 2020.
s/ Halil Suleyman Ozerden
HALIL SULEYMAN OZERDEN
UNITED STATES DISTRICT JUDGE
16
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?