14-597(L)
Thai-Lao Lignite (Thailand) Co., Ltd. v. Gov’t of the Lao People’s Democratic Republic
United States Court of Appeals
FOR THE SECOND CIRCUIT
______________
August Term, 2014
(Argued: April 1, 2015 Decided: July 20, 2017)
Docket Nos. 14‐597, 14‐1052, 14‐1497
______________
THAI‐LAO LIGNITE (THAILAND) CO., LTD., HONGSA LIGNITE (LAO PDR) CO., LTD.,
Petitioners‐Appellants–Cross‐Appellees,
–v.–
GOVERNMENT OF THE LAO PEOPLE’S DEMOCRATIC REPUBLIC,
Respondent‐Appellee–Cross‐Appellant.
______________
B e f o r e :
KATZMANN, Chief Judge, POOLER, and CARNEY, Circuit Judges.
______________
Appeal from orders of the United States District Court for the Southern District
of New York (Wood, J.), vacating its August 3, 2011 judgment enforcing an arbitral
award (the “Award”) against the Government of the Lao People’s Democratic Republic
(“Laos”), and denying the requests of Petitioners‐Appellants Thai‐Lao Lignite
(Thailand) Co., Ltd. (“TLL”), and Hongsa Lignite (Lao PDR) Co., Ltd. (“HLL”), that
Laos post security pending conclusion of the motion to vacate and any subsequent
appeals, and that the court enforce an English judgment also entered on the same
Award. The District Court entered its judgment enforcing the Award under the
Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10,
1958, 21 U.S.T. 2517, implemented by 9 U.S.C. §§ 201‐08 (the “New York Convention” or
“Convention”). It vacated its enforcement judgment upon Laos’s motion under Federal
Rule of Civil Procedure 60(b)(5), made over one year later, after a court in the Malaysian
arbitral seat set aside the Award. The District Court did so on the understanding that in
the circumstances of this case the Convention required it to give effect to the later
Malaysian decision annulling the Award. Petitioners argue that, in so construing its
obligations, the District Court exceeded the permissible bounds of its discretion. Had
the court examined and accorded appropriate weight to standard Rule 60(b)
considerations—including whether the motion was brought within a reasonable time,
whether the moving party acted equitably, and whether vacatur strikes an appropriate
balance between serving the ends of justice and preserving the finality of judgments—
the District Court would have been bound, they argue, to deny Laos’s vacatur motion.
The untimeliness of Laos’s appeal of the Award and Laos’s allegedly inequitable
conduct in Malaysia and before the District Court compel that result, they contend.
We agree with Petitioners that Rule 60(b)(5) applies to a district court’s
consideration of a motion to vacate a judgment under the circumstances of the instant
case. In adjudicating a Rule 60(b)(5) motion to vacate a judgment enforcing an arbitral
award that has, since the initial confirmation, been annulled in the primary jurisdiction,
district courts should analyze the full range of Rule 60(b) considerations, including
timeliness and the equities. In conducting this analysis, district courts ought to assign
significant weight to the concerns of international comity recently articulated in
Corporación Mexicana de Mantenimiento Integral, S. de R.L. de C.V. v. Pemex‐Exploración y
Producción, 832 F.3d 92 (2d Cir. 2016), cert. dismissed, 137 S. Ct. 1622 (2017). In the instant
case, however, consideration of these factors would not have materially changed the
outcome, especially in light of the District Court’s explanations of its rulings granting
vacatur and denying sanctions. We therefore AFFIRM the District Court’s decision to
vacate its earlier judgment enforcing the Award.
We further decide that the District Court committed no abuse of discretion by
denying Petitioners’ requests that Laos be required to post security during the pendency
of its motion and any subsequent appeals and that the court enforce the English
judgment. Accordingly, we AFFIRM these two orders as well.
AFFIRMED.
2
______________
JAMES E. BERGER (Charlene C. Sun, J. Emmett Murphy,
Nilufar Hossain, Kerianne Tobitsche, on the brief),
King & Spalding LLP, New York, NY, for Petitioners‐
Appellants–Cross‐Appellees.
ROBERT K. KRY (Steven F. Molo, Joel M. Melendez,
MoloLamken LLP, New York, NY; David J. Branson,
Anthony F. King, Tiana A. Bey, King Branson LLC,
Bethesda, MD; Anthony J. Hatab, Dressel & Hatab,
P.C., New York, NY, on the brief), for Respondent‐
Appellee–Cross‐Appellant.
______________
SUSAN L. CARNEY, Circuit Judge:
This case requires us to address how a district court should adjudicate a motion
to vacate a judgment that it has entered enforcing a foreign arbitral award, when that
award has later been set aside by courts in the arbitral seat. In particular, we consider
the interplay between Federal Rule of Civil Procedure 60(b)(5), which permits district
courts to “relieve a party . . . from a final judgment” when the judgment “is based on an
earlier judgment that has been reversed or vacated,” on the one hand, and the standards
for declining to enforce an arbitral award under the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, on the other.
Briefly, the question arises in the following context. In 2007, Petitioners Thai‐Lao
Lignite (Thailand) Co., Ltd. (“TLL”) and its subsidiary, Hongsa Lignite (Lao PDR) Co.,
3
Ltd. (“HLL”) (collectively, “Petitioners”) submitted to arbitration in Malaysia a
commercial dispute arising from the terminations by the Government of the Lao
People’s Democratic Republic (“Laos”) of contracts granting TLL rights to mine lignite
(a soft coal) in the Hongsa region of Laos and to build a major lignite‐burning power
plant there—an extensive project undertaken during the early 1990s. In late 2009, a duly
convened arbitral panel found Laos in breach and awarded Petitioners approximately
$57 million as compensation for their losses (the “Award”). After the period for
challenging the Award in Malaysia expired, Petitioners began enforcement actions
against Laos in the United States, the United Kingdom, and France under the
Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10,
1958, 21 U.S.T. 2517, implemented by 9 U.S.C. §§ 201‐08 (the “New York Convention” or
“Convention”). Their enforcement efforts succeeded in the United States and the United
Kingdom, resulting first in an August 2011 judgment in the United States District Court
for the Southern District of New York (the “August 2011 judgment”) and, later, a
November 2012 judgment in the High Court of Justice of England and Wales (the
“English judgment”).
In October 2010, almost one year after the Award was issued and nine months
after a challenge was due, Laos moved in Malaysia for an extension of time within
4
which to file its request to set aside the Award. The Malaysian courts eventually granted
Laos’s motion and then, in 2012, set aside the Award. Returning to the United States
with the Malaysian judgment in hand, Laos moved under Federal Rule of Civil
Procedure 60(b)(5) to vacate the District Court’s August 2011 judgment enforcing the
Award.
Rule 60(b) provides that, “[o]n motion and just terms, the court may relieve a
party . . . from a final judgment” for certain specified reasons, one of which is set forth
in Rule 60(b)(5): that “the judgment . . . is based on an earlier judgment that has been
reversed or vacated.” Fed. R. Civ. P. 60(b). Petitioners urged the District Court to deny
Laos’s motion to vacate, citing (among other conduct) Laos’s delay in Malaysia in
challenging the Award and its dilatory tactics in discovery matters arising in the U.S.
litigation—conduct that Petitioners argued was so egregious that it should bar Laos
from obtaining the equitable relief of vacatur.
The District Court rejected Petitioners’ arguments, concluding that the New York
Convention left it with exceedingly limited discretion: in essence, it was bound to give
effect to the Malaysian annulment unless doing so would offend basic standards of
justice in the United States. Finding that neither Laos’s conduct nor anything in the
Malaysian courts’ reasoning so tainted the Malaysian order such that vacatur would
5
offend fundamental standards of justice, the District Court granted Laos’s Rule 60(b)(5)
motion. In related rulings, the District Court also denied Petitioners’ later application to
enforce the English judgment, on grounds that the English judgment conflicted with the
presumptively dominant Malaysian judgment, and it rejected Petitioners’ request for
security from Laos to protect their interest in the Award during the pendency of its Rule
60(b) motion and any subsequent appeals.
Petitioners now appeal these orders. Because our determination of this appeal
rests in part on our decision in Corporación Mexicana de Mantenimiento Integral, S. de R.L.
de C.V. v. Pemex‐Exploración y Producción (“Pemex”), we have held our ruling in this
matter pending our decision and resolution of the petition for certiorari in that case. 832
F.3d 92 (2016), cert. dismissed, 137 S. Ct. 1622 (2017).
The New York Convention adopts an approach that does not require a party
seeking enforcement of an award in what is known as a “secondary jurisdiction” (here,
the United States) to await the conclusion of all appeals of the award that may be
pursued in the “primary jurisdiction” (here, Malaysia). While uniquely empowering
courts in the primary jurisdiction to set aside or annul an arbitral award, the
Convention also anticipates that an arbitral party that has prevailed may sue elsewhere
to enforce an award before the award has been reviewed by courts in the arbitral seat.
6
Thus, Article V of the Convention addresses one scenario that grows out of that
approach: when the prevailing party files an action to enforce the award in a secondary
jurisdiction and then, the primary jurisdiction sets aside the award, Article V(1)(e)
declares that a court of a secondary jurisdiction “may” refuse to enforce the award, N.Y.
Convention art. V(1)(e), in contrast to the general directive that such a court “shall”
enforce the award, id. art. III.
In Pemex, our Court recently addressed how district courts should evaluate an
enforcement petition when the arbitral award has been annulled in the primary
jurisdiction. There, we ruled that although Article V(1)(e)’s permissive language could
be read to suggest that a district court has “unfettered discretion” as to whether to
enforce such an award, the court’s exercise of that discretion should rather be treated as
“constrained by the prudential concern of international comity.” Pemex, 832 F.3d at 106.
Pemex also carved out a “public policy” exception to the comity principle for occasions
when enforcing an arbitral award annulled in the primary jurisdiction is needed “to
vindicate ‘fundamental notions of what is decent and just’ in the United States.” Id. at
107 (quoting TermoRio S.A. E.S.P. v. Electranta SP., 487 F.3d 928, 938 (D.C. Cir. 2007)); see
also Baker Marine (Nig.) Ltd v. Chevron (Nig.) Ltd., 191 F.3d 194, 197 n.3 (2d Cir. 1999);
Ackermann v. Levine, 788 F.2d 830, 837, 841 (2d Cir. 1986).
7
In Pemex, however, we did not have occasion to consider the interaction between
Rule 60(b)(5) and the primary jurisdiction’s annulment of an arbitral award. We now
consider that interaction. We decide that Rule 60(b)(5) applies to a district court’s
consideration of a motion to vacate a judgment enforcing an arbitral award that has
since been annulled in the primary jurisdiction. In conducting a Rule 60(b)(5) analysis,
district courts should analyze the full range of Rule 60(b) considerations, including
timeliness and the equities. In conducting this analysis, courts—in accordance with
Pemex—ought to assign significant weight to considerations of international comity in
the absence of a need to vindicate “‘fundamental notions of what is decent and just’ in
the United States.” Pemex, 832 F.3d at 107 (quoting TermoRio, 487 F.3d at 938). In the
instant case, however, more explicit consideration of these factors would not have
materially changed the District Court’s decision to vacate its prior judgment, especially
in light of the District Court’s explanations of its rulings granting vacatur and denying
sanctions.
We therefore AFFIRM the District Court’s order vacating the judgment. We
further conclude that the District Court did not exceed the permissible bounds of its
discretion in refusing to order Laos to post security during the pendency of its Rule
60(b) motion and any subsequent appeals, nor did it err by refusing to enforce the
8
English judgment. Accordingly, we also AFFIRM the District Court’s order denying the
requested security, and we AFFIRM its order denying enforcement of the English
judgment.
BACKGROUND
I. The Award
We draw the following statement of facts primarily from the text of the Award.
The facts are largely undisputed by the parties; any differences are noted.
In the early 1990s, TLL (a Thai corporation) and its subsidiary HLL (a Laotian
corporation partly owned by a state‐owned enterprise of Laos) worked with Laos to
develop plans for mining lignite in the Hongsa region of Laos, in the northwest area of
the country, near the Thai border. The mining operations were intended to enable and
support the parties’ construction and operation of a power plant that would generate
electricity for sale primarily in and to Thailand. In furtherance of these plans, in 1992
and 1993 TLL entered into successive contracts with Laos (the “Mining Contracts”), in
which, among other things, Laos granted TLL the right to conduct certain survey and
mining operations in the Hongsa region, and TLL undertook to do so and to form HLL.
In 1994, TLL and Laos entered into an additional contract (the “Project Development
Agreement” or “PDA”), in which Laos granted TLL the right to build at its own expense
9
and to manage a plant to be located near the mines, that would use the mine’s coal
production to generate electrical power.
In the early phases of the Hongsa project, Petitioners performed geological
surveys, purchased equipment, and built a road to access the envisioned mine. They
also tried to secure project financing from outside sources and to negotiate a power
purchase agreement with the government of Thailand. In 1997, however, funding
negotiations fell apart and resources for the project began to dry up when the region
was beset by severe economic troubles. These lasted from 1997 roughly through 2000,
and came to be known as the Asian Financial Crisis.
By 2006, after one of Petitioners’ attempts to obtain additional funding came to
naught, Laos wrote to TLL, expressing its concerns that Petitioners would be unable to
fulfill their obligations under the PDA. According to Laos, Petitioners failed adequately
to address Laos’s concerns, and, accordingly, after sending a notice of default in
September 2006, by letter dated October 5, 2006, Laos sent Petitioners a notice
terminating the PDA. This missive was followed shortly by a second letter, in which
Laos announced its termination of the Mining Contracts as well. According to
Petitioners, in doing so Laos both failed to comply with the PDA’s termination
procedures and terminated the agreements without cause, thus breaching the PDA.
10
Efforts to settle the matter failed. The PDA provided that any dispute arising out
of that agreement would be submitted to arbitration in Kuala Lumpur, Malaysia, and
conducted under the United Nations Commission on International Trade Law
(UNCITRAL) Arbitration Rules. The Mining Contracts, in contrast, provided that
disputes would be resolved by the Laotian Board of Economic Conciliation, the Laotian
Court, or the International Economic Dispute Settlement Organization.
In June 2007, Petitioners initiated arbitral proceedings in Malaysia. The dispute
was heard by a panel of three U.S. lawyers (the “Panel”) in Kuala Lumpur in July 2009.
In November 2009, the Panel issued a 48‐page written award, finding for Petitioners.
The Panel ruled that Petitioners’ lack of success in raising funds following the Asian
Financial Crisis did not put them in breach of the PDA. It further concluded that Laos
breached the PDA by not properly terminating that agreement. It therefore found Laos
liable to Petitioners for damages caused by the breach, and, after reviewing cost
estimates submitted by all parties, concluded that Petitioners were entitled to
reimbursement of $40 million in total investment costs. This sum represented amounts
that Petitioners “reasonably and unavoidably actually expended out‐of‐pocket in the
normal course of preparation for performance or in performance up until the date of
breach,” J.A. 149, including the cost of conducting initial mining surveys and building a
11
road to the site (expenses that, according to Laos, predated the PDA). In addition, the
Panel awarded Petitioners a “premium” of $4 million (an “allowance for a reasonable
return on Claimants’ total investment costs,” contemplated by the PDA), J.A. 157,
interest, and attorney’s fees, for a total award of $57,210,000, J.A. 161.
Under Malaysian law, any application to set aside an arbitral award “may not be
made after the expiry of ninety days from the date on which the party making the
application had received the award.” J.A. 2338 (reproducing Laws of Malaysia,
Arbitration Act 2005, Act 646, Section 37(4)). Laos received the Award on November 4,
2009. The ninety‐day period for an application to set aside an award thus expired in
early February 2010. Laos made no set‐aside application during that period.
II. Petitioners’ efforts to enforce the Award
In the summer of 2010, Petitioners began efforts to enforce the Award under the
New York Convention. The Convention governs the “recognition and enforcement of
arbitral awards made in the territory of a State other than the State where the
recognition and enforcement of such awards are sought.” N.Y. Convention art. I.
Signatories agree to “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 following articles.” Id. art. III.
12
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.” Yusuf Ahmed
Alghanim & Sons v. Toys “R” Us, Inc., 126 F.3d 15, 23 (2d Cir. 1997). The state in which or
under whose laws an award is made is referred to as the “primary jurisdiction,” while
all other signatory states are considered “secondary jurisdictions.” See Karaha Bodas Co.
v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 500 F.3d 111, 115 n.1 (2d Cir.
2007); W. Michael Reisman & Heide Iravani, The Changing Relation of National Courts and
International Commercial Arbitration, 21 Am. Rev. Int’l Arb. 5, 12 (2010). The Convention
conceives of a secondary jurisdiction’s review of an award as relatively limited: Article
III of the Convention provides that the secondary jurisdiction “shall” enforce the award
unless the party opposing enforcement furnishes proof that one (or more) of seven
exceptions described in Article V obtains. See N.Y. Convention arts. III, V. The
obligations on U.S. courts that the Convention imposes as to the enforcement of foreign
arbitral awards are stated in Chapter 2 of the Federal Arbitration Act (“FAA”), 9 U.S.C.
§§ 201‐08. As relevant here, Section 207 directs that “[t]he 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.” 9 U.S.C. § 207.
13
Petitioners began one effort to enforce the Award in the United States. In June
2010, they filed an action in New York state court seeking confirmation of the Award.
Laos removed the action to the United States District Court for the Southern District of
New York, and then moved to dismiss the action. It argued against enforcing the
Award, asserting primarily that the arbitral panel exceeded its jurisdiction when it
resolved disputes subject to the Mining Contracts, not just the PDA, and when it
incorporated costs incurred under those contracts into its Award, and that these errors
invalidated the Award.
The District Court rejected this argument and on August 5, 2011, entered
judgment enforcing the Award. The court concluded that Laos’s objections did not
“raise issues of jurisdiction or arbitrability,” as required to fall within one of Article V’s
grounds for non‐enforcement (or another applicable ground), “but rather concern[ed]
the Panel’s interpretation of the PDA and its calculation of damages.” Thai‐Lao Lignite
(Thailand) Co., Ltd. v. Gov’t of the Lao People’s Democratic Republic, No. 10 Civ. 5256, 2011
WL 3516154, at *15 (S.D.N.Y. Aug. 3, 2011). The District Court further advised that, even
if Laos’s objection was properly construed as a jurisdictional challenge, it would not
refuse to enforce the Award on that basis, because in its view “the parties agreed to
14
delegate questions of arbitrability and jurisdiction to the Panel” and the Panel had
decided that those matters were within its jurisdiction. Id.
Laos then appealed that decision to this Court. We affirmed the District Court’s
judgment by summary order, ruling that the District Court committed no abuse of
discretion in deferring to the Panel’s jurisdictional decision. Thai‐Lao Lignite (Thailand)
Co. Ltd. v. Gov’t of Lao People’s Democratic Republic, 492 F. App’x 150, 151‐52 (2d Cir.
2012).
While the enforcement action was proceeding in New York, Petitioners were also
attempting to enforce the Award in the United Kingdom and in France. They enjoyed
some success. In July 2010, shortly after the New York action was filed, the High Court
of Paris entered judgment for Petitioners enforcing the Award. (This judgment was later
reversed, however, by the Court of Appeal of Paris, which concluded that the Panel had
improperly ruled on matters outside the scope of the arbitration agreement.) And in
November 2012, after we affirmed the District Court’s August 2011 judgment, the High
Court of Justice of England and Wales entered judgment enforcing the Award as well.
With the English judgment in hand, Petitioners filed a second action in the
Southern District of New York in February 2013, asking the District Court to enforce the
15
English judgment under New York’s Uniform Foreign Country Money‐Judgments
Recognition Act, N.Y. CPLR 5301‐09.
III. Laos’s efforts to set aside the Award
In early October 2010, in addition to opposing Petitioners’ action for enforcement
of the Award, Laos requested that the District Court stay the proceeding and
represented to the court that it had moved in Malaysia to set aside the Award. Within
days, however, it came to light that Laos’s Malaysian counsel had not yet filed its set‐
aside action in Malaysia. Upon that revelation and the parties’ ensuing charges and
retorts, Laos withdrew its request for a stay and the District Court proceeded to
consider the enforcement action.
Later in October, shortly after this kerfuffle, Laos in fact initiated proceedings in
Malaysia to set aside the Award. Because its time to appeal the Award had expired in
early February 2010, see J.A. 2338, Laos sought an extension of this time from the
Malaysian High Court. Laos explained that it was unaware of this deadline when it
allowed the time to challenge the Award to lapse nine months earlier, and requested to
be relieved of the effect of its errors.
The Malaysian High Court initially denied Laos’s application, but the Court of
Appeal of Malaysia reversed, finding an extension appropriate for a foreign sovereign
16
when, as here, the delay was the result of the sovereign’s asserted lack of knowledge of
the local law and inadequate advice from its legal advisors. Commenting that to
“[r]efus[e] the extension of time” would be “tantamount to shutting out the
Government of Laos from challenging [the] award,” J.A. 976, the Court of Appeal
granted the request and remanded the case to the High Court for consideration of the
merits.
On December 27, 2012, almost one and one‐half years after the District Court
entered the August 2011 judgment enforcing the Award, the Malaysian High Court
annulled the Award and ordered re‐arbitration of the dispute before a new panel. The
High Court acknowledged that courts in the United States and the United Kingdom had
rejected Laos’s jurisdictional challenge to the Panel’s Award, but ruled that, in its view,
the Panel had exceeded its jurisdiction by addressing disputes arising not just under the
PDA, but under the Mining Contracts as well. The High Court concluded that the
Award amount, which included costs borne by HLL and other subsidiaries not parties
to the PDA, had impermissibly “lumped together or co‐mingled the claims and
disputes under the Mining Contracts with the claims and disputes under the PDA.” J.A.
1572. (On review in early 2014, the Malaysian Court of Appeal affirmed the High
Court’s judgment.)
17
Armed with the High Court’s set‐aside judgment, on February 11, 2013—one
month and a half after the High Court annulled the Award and one year and a half after
the District Court entered the original enforcement judgment—Laos moved under
Federal Rule of Civil Procedure 60(b)(5) to vacate that judgment. Petitioners objected,
urging primarily two grounds for denying vacatur. First, Petitioners challenged various
aspects of the Malaysian Court of Appeal’s order granting Laos an extension of time
within which to challenge the Award and the merits of the High Court’s subsequent set‐
aside judgment. Second, Petitioners claimed that Laos’s litigation conduct in Malaysia
and in the United States, which it characterized as inequitable, should preclude Laos
from receiving Rule 60(b) relief.
On February 6, 2014, just weeks after the Malaysian Court of Appeal affirmed the
High Court’s set‐aside judgment, the District Court granted Laos’s Rule 60(b)(5) motion
and vacated its August 2011 judgment. Thai‐Lao Lignite (Thailand) Co., Ltd. v. Gov’t of the
Lao People’s Democratic Republic, 997 F. Supp. 2d 214 (S.D.N.Y. 2014). The District Court
held that, under the New York Convention, it was required to give effect to the
Malaysian court’s set‐aside judgment and vacate the August 2011 judgment unless
giving effect to the judgment would violate our “fundamental notions of what is decent
and just.” Id. at 221 (quoting TermoRio, 487 F.3d at 939). Applying this standard, the
18
District Court held that Laos’s alleged misconduct in the Malaysian proceedings and the
purported errors in the Malaysian courts’ reasoning did not “rise to the level of
violating basic notions of justice such that [it] should ignore comity considerations and
disregard the Malaysian judgments.” Id. at 223. The District Court therefore vacated its
August 2011 judgment and denied Petitioners’ additional request that Laos be required
to post suitable security for the judgment during the pendency of an appeal. Id. at 227‐
28.
The District Court turned separately to Petitioners’ action to enforce the English
judgment under New York’s Uniform Foreign Country Money‐Judgments Recognition
Act, N.Y. CPLR 5301‐09, and in March 2014, the court denied Petitioners’ application.
The District Court pointed out that New York law afforded it discretion to refuse to
recognize a foreign judgment “if . . . the judgment conflicts with another final and
conclusive judgment.” See N.Y. CPLR 5304(b)(5). The Court found that the English
judgment enforcing the Award conflicted with the Malaysian judgment annulling the
Award and concluded “that the later Malaysian judgment should have priority because
Malaysia, as the seat of the arbitration and therefore the primary jurisdiction under the
New York Convention, had the sole authority to determine whether the arbitral award
19
was valid and, if not, to set it aside.” J.A. 2925. The Court denied Petitioners’ application
and directed the clerk of court to close the case.
Petitioners timely appealed.
DISCUSSION
Petitioners challenge three orders entered by the District Court: (1) its grant of
Laos’s Rule 60(b)(5) motion to vacate the August 2011 judgment; (2) its denial of
Petitioners’ request that Laos, as the moving party, post a security bond during the
pendency of its Rule 60(b) motion and any subsequent appeals; and (3) its denial of
Petitioners’ application to enforce the English judgment. Each ruling was committed to
the District Court’s discretion. See In re Terrorist Attacks on Sept. 11, 2001, 741 F.3d 353,
357 (2d Cir. 2013) (decision on Rule 60(b) motion in district court’s discretion); Haberman
v. Tobin, 626 F.2d 1101, 1104 (2d Cir. 1980) (request for a security in district court’s
discretion); Byblos Bank Europe, S.A. v. Sekerbank Turk Anonym Syrketi, 10 N.Y.3d 243, 248
(N.Y. 2008) (refusal to enforce under N.Y. CPLR 5304(b)(5) in court’s discretion). Insofar
as these orders rested on a decision to extend or deny comity to the courts of a foreign
sovereign, we review such decisions for abuse of discretion as well. See Pemex, 832 F.3d
at 100. A court abuses its discretion when “(1) its decision rests on an error of law (such
as application of the wrong legal principle) or a clearly erroneous factual finding, or (2)
20
its decision—though not necessarily the product of a legal error or a clearly erroneous
factual finding—cannot be located within the range of permissible decisions.” Zervos v.
Verizon New York, Inc., 252 F.3d 163, 169 (2d Cir. 2001).
We address each of the challenged orders in turn. For the reasons set forth below,
as to the Rule 60(b)(5) motion, we affirm the District Court’s order vacating the August
2011 judgment. We then turn briefly to the challenges posed to the remaining two
orders, and conclude that the District Court acted within the permissible bounds of its
discretion in refusing to require Laos to post security and in denying recognition of the
English judgment.
I. Laos’s Rule 60(b)(5) motion to vacate the August 2011 judgment
Petitioners argue that the District Court erroneously failed to consider the full
range of interests protected by Rule 60(b) when it ruled on Laos’s vacatur motion, and
that it should have assigned greater—even dispositive—adverse weight to Laos’s
untimeliness in seeking review of the Award and other inequitable conduct.
Federal Rule of Civil Procedure 60 “prescribes procedures by which a party may
seek relief from a final judgment.” House v. Sec’y of Health & Human Servs., 688 F.2d 7, 9
(2d Cir. 1982). Rule 60(b) provides that, “[o]n motion and just terms, the court may
relieve a party or its legal representative from a final judgment, order, or proceeding” if
21
one of several enumerated bases for relief is established. Fed. R. Civ. P. 60(b).1 One such
basis for relief is that the judgment from which relief is sought “is based on an earlier
judgment that has been reversed or vacated.” Fed. R. Civ. P. 60(b)(5). As we noted
earlier, the decision whether to grant such relief is addressed to the sound discretion of
the district court. In re Terrorist Attacks on Sept. 11, 2001, 741 F.3d at 357.
In exercising that discretion, courts aim to “strike[] a balance between serving the
ends of justice and preserving the finality of judgments.” Nemaizer v. Baker, 793 F.2d 58,
61 (2d Cir. 1986). In service of the latter interest, Rule 60(c) requires that a motion for
1 Rule 60(b) and (c), both relevant here, provide in their entirety:
(b) Grounds for Relief from a Final Judgment, Order, or Proceeding. On motion
and just terms, the court may relieve a party or its legal representative from a
final judgment, order, or proceeding for the following reasons:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not
have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic),
misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released or discharged; it is based on
an earlier judgment that has been reversed or vacated; or applying it
prospectively is no longer equitable; or
(6) any other reason that justifies relief.
(c) Timing and Effect of the Motion.
(1) Timing. A motion under Rule 60(b) must be made within a reasonable
time—and for reasons (1), (2), and (3) no more than a year after the entry
of the judgment or order or the date of the proceeding.
(2) Effect on Finality. The motion does not affect the judgment’s finality or
suspend its operation.
22
relief under Rule 60(b) be made “within a reasonable time.” Fed. R. Civ. P. 60(c). This is
to be determined based on “the particular circumstances of the case,” taking into
account the reason for any delay, the possible prejudice to the non‐moving party, and
the interests of finality. PRC Harris, Inc. v. Boeing Co., 700 F.2d 894, 897 (2d Cir. 1983)
(discussing Rule 60(c) reasonableness of timing in context of Rule 60(b)(6) motion). In
addition, because vacatur under Rule 60(b) is an equitable remedy, courts may deny
Rule 60(b) relief if the moving party is found to have acted inequitably. See Motorola
Credit Corp. v. Uzan, 561 F.3d 123, 127 (2d Cir. 2009). The burden is on the moving party
to demonstrate that it is entitled to relief, and courts “[g]enerally . . . require that the
evidence in support of the motion to vacate a final judgment be highly convincing.”
Kotlicky v. U.S. Fid. & Guar. Co., 817 F.2d 6, 9 (2d Cir. 1987) (internal quotation marks
omitted). Careful attention to these considerations and to whether the movant is
entitled to relief in the particular circumstances of each case ensures that Rule 60(b) will
“be broadly construed to do substantial justice,” while respecting that “final judgments
should not be lightly reopened.” Nemaizer, 793 F.2d at 61 (internal quotation marks
omitted).
Article III of the Convention places on each contracting state the obligation to
“recognize arbitral awards as binding and enforce them in accordance with the rules of
23
procedure of the territory where the award is relied upon, under the conditions laid
down in the following articles.” N.Y. Convention art. III. Article V acknowledges certain
exceptions to that obligation. Thus, Section 1(e) of Article V provides:
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: . . . (e) [t]he award . . . 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.
Id. art. V(1)(e). For ease of reference, we set out the full text of Article V in the margin.2
2 Article V provides in full:
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 referred to in article II 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 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
24
Although Article V(1)(e)’s text appears to leave the District Court with discretion
to enforce an award that has been annulled in the primary jurisdiction—after all, it does
not say that enforcement of the award “must” be refused—the D.C. Circuit in TermoRio
S.A. E.S.P. v. Electranta S.P., 487 F.3d 928 (D.C. Cir. 2007), held, and we recently agreed in
Pemex, that the scope of that discretion is “constrained by the prudential concern of
international comity.” Pemex, 832 F.3d at 106; TermoRio, 487 F.3d at 938‐39. In TermoRio,
the D.C. Circuit ruled that courts considering whether to enforce an award that has
been set aside in the primary jurisdiction should give effect to a judicial decision of the
primary jurisdiction unless enforcement of that judgment would offend the public
policy of the state in which enforcement is sought. TermoRio, 487 F.3d at 938‐39. The
D.C. Circuit acknowledged that our Court “implicitly endors[ed]” this “‘public policy’
(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.
25
gloss on Article V(1)(e)” in Baker Marine (Nig.) Ltd. v. Chevron (Nig.) Ltd., 191 F.3d 194 (2d
Cir. 1999), where we suggested that offense to public policy might provide an adequate
reason to refuse to recognize a judgment of a foreign court. TermoRio, 487 F.3d at 937
(citing Baker Marine, 191 F.3d at 197 n.3). The D.C. Circuit expanded on Baker Marine,
however, holding 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,” a standard drawn from the Restatement (Second) of Conflict of Laws
§ 117 (1971) and cases interpreting Article V(2)(b)’s “public policy” exception to
enforcement of an award. Id. at 938‐39 (internal quotation marks omitted).
In Pemex, we adopted this view of the scope of our courts’ discretion under
Article V(1)(e), concluding that refusal to recognize a foreign judgment nullifying an
award is “appropriate only to vindicate ‘fundamental notions of what is decent and just’
in the United States.” Pemex, 832 F.3d at 106 (quoting TermoRio, 487 F.3d at 938). Pemex,
of course, found that in the “rare circumstances” of that case it would not be an abuse of
discretion to reject the demands of comity in favor of honoring public policy. Id. at 111.
But it nonetheless recognized a strong presumption in favor of following the primary
jurisdiction’s ruling. Id. (“Any court should act with trepidation and reluctance in
26
enforcing an arbitral award that has been declared a nullity by the courts having
jurisdiction over the forum in which the award was rendered.”).
In Pemex, we did not have occasion to consider the interaction between Rule
60(b) and the primary jurisdiction’s annulment of an arbitral award. The arbitral award
that was our focus in Pemex was annulled in the primary jurisdiction (Mexico) while the
district court’s judgment confirming the award was on appeal to this Court. See Pemex,
832 F.3d at 99‐100. This Court, upon motion by the party that had opposed confirmation
of the award (Pemex), vacated the district court’s judgment confirming the award and
remanded for further proceedings in light of the intervening Mexican court decision
nullifying the award. See Corporación Mexicana de Mantenimiento Integral, S. de R.L. de C.V.
v. Pemex Exploración y Producción, No. 10‐4656‐cv, 2012 WL 9346475, at *l (2d Cir. Feb. 16,
2012). On remand, the district court granted the “renewed motion to confirm the
[a]ward” made by the award creditor (COMMISA), finding that the nullification of the
award in Mexico “violated basic notions of justice.” Corporación Mexicana de
Mantenimiento Integral, S. de R.L. de C. V. v. Pemex‐Exploración y Producción, 962 F. Supp.
2d 642, 661 (S.D.N.Y. 2013). We affirmed. See Pemex, 832 F.3d at 97.
In the instant case, by contrast, this Court had already affirmed the District
Court’s judgment confirming the arbitral award by the time the award was set aside in
27
Malaysia, and the District Court was presented with a motion pursuant to Rule 60(b)(5)
to vacate its judgment confirming the arbitral award. This case raises the question, then,
of how the Rule 60(b)(5) inquiry should proceed when the judgment sought to be
vacated is one confirming an arbitral award that was subsequently vacated in the
primary jurisdiction.
Petitioners argue that the District Court erred as a matter of law in exercising its
discretion by giving presumptive effect to the foreign set‐aside judgment over its own
duly entered judgment. Treating the foreign judgment as conclusive fails to accord any
weight to the need to preserve the finality of judgments that Rule 60(b) protects, they
assert. They contend further that the court’s heavy deference improperly placed on
them the burden to demonstrate that the judgment should not be vacated, whereas—in
light of the entry of judgment on the Award more than a year earlier—the burden
should have been assigned to Laos to demonstrate entitlement to Rule 60(b) relief. Laos,
in contrast, insists that the New York Convention mandates giving conclusive effect to
the Malaysian annulment of the Award, even in this distinct procedural setting.
As an initial matter, our review of the text of the Convention and the applicable
provisions of the FAA suggests that Rule 60(b)(5) applies to motions to vacate
28
judgments confirming arbitral awards that are subsequently set aside in the primary
jurisdiction.
We turn first to the text of the Convention.3 See Medellín v. Texas, 552 U.S. 491, 506
(2008) (“The interpretation of a treaty, like the interpretation of a statute, begins with its
text.”). Article III of the Convention requires contracting states to “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 following articles.”
N.Y. Convention art. III (emphasis added). In our view, Rule 60(b) is one such “rule of
procedure.” See Fed. R. Civ. P. 60 advisory committee’s note to 1946 amendment
(describing Rule 60(b) as one “procedure” by which a judgment may be vacated). By
this reference, Article III suggests that a court should apply its procedural rules for
vacating judgments to its judgments enforcing arbitral awards. Nothing in the language
suggests that post‐judgment procedures were not encompassed by Article III’s phrase.
This reading of the Convention derives additional support from the FAA itself.
The FAA applies to judgments entered under the Convention “to the extent the chapter
3 In Pemex, we recognized that the FAA “expressly incorporates the terms of the Panama
Convention,” and turned directly to the text of the Convention to determine the obligations of
U.S. courts called on to enforce arbitral awards rendered under the Panama Convention. Pemex,
832 F.3d at 105 (citing 9 U.S.C. § 301). Because there is “no substantive difference” between the
Panama and New York Conventions, id., and the FAA similarly “expressly incorporates” the
terms of the New York Convention, id.; see 9 U.S.C. §§ 201‐08, we follow Pemex’s lead and turn to
the text of the Convention, with the FAA’s procedural directives, as the governing law.
29
is not in conflict with” Chapter 2 (which codifies the Convention) or the Convention
itself. 9 U.S.C. § 208. Thus, Section 13 of Chapter 1 directs that judgments entered under
the FAA “shall have the same force and effect, in all respects, as, and be subject to all the
provisions of law relating to, a judgment in an action.” 9 U.S.C. § 13. The “provisions of
law relating to[] a judgment in an action” include the Federal Rules of Civil Procedure.
See Fed. R. Civ. P. 81(a)(6) (providing that the Rules “govern proceedings under” the
FAA, “except as [it] provide[s] other procedures”); cf. ISC Holding AG v. Nobel Biocare
Fin. AG, 688 F.3d 98, 114 (2d Cir. 2012) (“[W]here the FAA’s procedures are in conflict
with those of the civil rules, the former controls.”). This observation reinforces our view
that Rule 60(b) applies to judgments entered on foreign arbitral awards under the
Convention just as it does to judgments entered on domestic arbitral awards. Applying
this reasoning, other Courts of Appeals reviewing decisions adjudicating motions to
vacate judgments entered on domestic arbitral awards have applied Rule 60(b). See AIG
Baker Sterling Heights, LLC v. Am. Multi‐Cinema, Inc., 579 F.3d 1268, 1272 (11th Cir. 2009);
Baltia Air Lines, Inc. v. Transaction Mgmt., Inc., 98 F.3d 640, 642 (D.C. Cir. 1996). This
approach—applying Rule 60(b) to motions to vacate judgments entered on domestic
awards—also applies, we think, to judgments entered under the New York Convention.
No part of the Convention as implemented in Chapter 2 of the FAA conflicts with this
30
directive; indeed, Section 13 of the FAA and Article III of the Convention tend to
reinforce each other.
Laos acknowledges, in fact, that “Rule 60(b) is consistent with the [New York]
Convention.” Appellee’s Br. 62. The question is then how courts adjudicating a Rule
60(b)(5) motion to vacate a judgment confirming an arbitral award that has been
vacated in the primary jurisdiction should proceed. In adjudicating such a motion,
district courts should consider the point that “under the Convention, the power and
authority of the local courts of the [primary jurisdiction] remain of paramount
importance.” Yusuf Ahmed Alghanim & Sons, 126 F.3d at 22. The annulment of an arbitral
award in the primary jurisdiction should therefore be given significant weight. See
Pemex, 832 F.3d at 107.
In fact, Article V(l)(e) considerations may readily be incorporated into the
ordinary course of a court’s Rule 60(b) analysis. Courts considering Rule 60(b)(5)
motions are generally, and correctly, solicitous of a movant seeking relief when a prior
judgment on which the challenged judgment relies has been vacated. See, e.g., Flowers v.
S. Reg’l Physician Servs., Inc., 286 F.3d 798 (5th Cir. 2002); Cal. Med. Ass’n v. Shalala, 207
F.3d 575 (9th Cir. 2000); Maul v. Constan, 23 F.3d 143 (7th Cir. 1994); cf. Assoc. for Retarded
Citizens of Conn., Inc. v. Thorne, 68 F.3d 547, 553 (2d Cir. 1995) (holding that Rule 60(b)(5)
31
applied to motion for reconsideration of attorney’s fees). The prudential concerns for
international comity and the high standard for overcoming the presumptive effect of a
primary jurisdiction’s annulment, as articulated in Pemex, fit comfortably within the
scope of this solicitude. Of course, consistently with Pemex, the party opposing vacatur
of a judgment enforcing a later‐annulled award may show in support of its opposition
that giving effect to the judgment annulling the award would offend “‘fundamental
notions of what is decent and just’ in the United States.” Pemex, 832 F.3d at 107 (quoting
TermoRio, 487 F.3d at 938). In the absence of such a public policy concern, however, the
annulment of an award in the primary jurisdiction should weigh heavily in a district
court’s Rule 60(b)(5) analysis.
Nevertheless, in ruling on a Rule 60(b)(5) motion, even in the context of a
judgment entered on a foreign arbitral award under the New York Convention, a
district court should be guided by the full range of interests protected by Rule 60(b).
Courts should consider whether the motion was made within a reasonable time,
whether the movant acted equitably, and whether vacatur would strike an appropriate
balance between serving the ends of justice and preserving the finality of judgments, as
well as the prudential concern for international comity.
32
The Convention’s concern for comity is thus only one of the considerations to be
taken into account in deciding a Rule 60(b)(5) motion. Accordingly, courts acting on
Rule 60(b)(5) motions that are based on later‐annulled arbitral awards must not simply
treat the annulment as dispositive of the Rule 60(b)(5) analysis. They should analyze the
full range of Rule 60(b) considerations, including the weighty interests served by
protecting the finality of judgments of our courts, and must be attentive to the fact that
the burden of demonstrating that vacatur is appropriate lies with the party seeking that
result. This need not be an onerous burden for the beneficiaries of the annulment, and it
need not require too much more from the District Court than was done here. But it does
require recognition and consideration of the interests protected by Rule 60(b).
We presume that the District Court, in its diligence, considered the Rule 60(b)
factors, but it has not given us the benefit of its analysis. More explicit consideration of a
broader range of Rule 60(b) factors by the District Court would have been helpful in the
instant case. Our review of the record and of the District Court’s actions persuades us,
however, that the District Court did not exceed the permissible bounds of its discretion.
First, we observe that over the varied course of the proceedings the District Court
gave some explicit consideration to the interests of justice. For example, the District
Court noted that the Malaysian judgment annulling the Award “did not leave
33
Petitioners . . . without a remedy” and acknowledged that the dispute would be re‐
arbitrated before a different panel of arbitrators. Thai‐Lao Lignite, 997 F. Supp. 2d at 227.
This case is thus unlike Pemex, where the award was annulled and the laws in the
foreign jurisdiction were changed in the interim, precluding any future recovery. See
Pemex, 832 F.3d at 107‐08. Further, as the District Court recognized, the circumstances
surrounding the proceedings in Malaysia are far less suspect and therefore more
worthy of presumptive recognition, than the circumstances surrounding the
proceedings in Pemex, where we found that the district court did not abuse its discretion
in determining that “basic notions of justice” would be offended by failure to enforce
the later‐annulled award. See Thai‐Lao Lignite, 997 F. Supp. 2d at 227. In Pemex, we
concluded that “[t]he high hurdle of the public policy exception” was “surmounted . . .
by four powerful considerations: (1) the vindication of contractual undertakings and the
waiver of sovereign immunity; (2) the repugnancy of retroactive legislation that
disrupts contractual expectations; (3) the need to ensure legal claims find a forum; and
(4) the prohibition against government expropriation without compensation.” Pemex,
832 F.3d at 107. Here, although we might not necessarily agree with the merits of the
Malaysian courts’ judgments, we see no grounds for such concerns.
34
Second, none of the allegedly inequitable conduct called to the attention of the
District Court justifies denying Laos the relief from enforcement that it requests. Laos’s
allegedly inequitable conduct falls into several categories. Petitioners’ complaints
concern primarily Laos’s conduct before the Malaysia court. For example, Petitioners
object to Laos’s delay in filing the action to set aside the Award and its alleged failure to
adhere to the PDA’s covenant not to challenge an arbitral award. The import of this
conduct—largely, the merits of legal positions taken, and not egregious behavior of
another sort—was already addressed by the District Court in its order vacating the
judgment and rejected by it as an unavailing attempt by Petitioners to challenge the
merits of the Malaysian set‐aside judgment. See Thai‐Lao Lignite, 997 F. Supp. 2d at 223‐
25. The District Court did not assign any weight to the alleged “misconduct” with
which Petitioners charged Laos.
In addition, Petitioners criticize Laos for failing to timely comply with the
District Court’s discovery orders. This conduct has also already been addressed by the
District Court in its opinions denying (in large part) Petitioners’ motions for sanctions.
See Thai‐Lao Lignite, 997 F. Supp. 2d at 223 n.7 (citing Thai‐Lao Lignite (Thailand) Co., Ltd.
v. Gov’t of Lao People’s Democratic Republic, 10 Civ. 5256, 2013 WL 3970823 (S.D.N.Y. Aug.
2, 2013); Thai‐Lao Lignite (Thailand) Co., Ltd. v. Gov’t of the Lao People’s Democratic Republic,
35
No. 10 Civ. 5256, 2011 WL 4111504 (S.D.N.Y. Sept. 13, 2011)). In those opinions, the
District Court concluded that Laos’s objections to its discovery orders did not “evince[]
bad faith or serious and studied disregard for the orderly process of justice,” as would
be required to warrant a sanctions award. Thai‐Lao Lignite, 2011 WL 4111504, at *11
(internal quotation marks omitted). It found further that Laos’s non‐compliance was
“substantially justified, either because [Laos] took a reasonable (if ultimately mistaken)
legal position or because the information sought [was] not available.” Thai‐Lao Lignite,
2013 WL 3970823, at *5. Cumulatively, we think, these findings show that had the
District Court considered this conduct more expressly in the context of Laos’s Rule
60(b)(5) motion, it would not have viewed the conduct as sufficiently dilatory to justify
its continued enforcement of an annulled award. To find otherwise, as Laos points out,
and to rule that the conduct entirely precluded the requested vacatur under Rule
60(b)(5), would mean in effect directing the District Court to enter the equivalent of a
$57 million sanction against Laos for its misconduct—a steep fine indeed, and one that
the record gives no reason to think the District Court would have imposed.
The remaining conduct of which Petitioners complain is best described as either
unnecessarily combative or careless. We are not persuaded that it demonstrates the kind
of “chutzpah” that has led courts in this Circuit to deny otherwise merited relief, or that
36
the District Court here (judging from its management of the behavior during the
proceedings) would have seen as outcome‐determinative. See, e.g., Motorola Credit Corp.
v. Uzan, 561 F.3d 123, 128 & n.5 (2d Cir. 2009). Our decision in Uzan offers an instructive
contrast in this regard. There, we affirmed the district court’s discretionary denial of a
request for Rule 60(b) relief because the movants had not “pursued their defense with
clean hands.” Id. at 127 (internal quotation marks omitted). As we explained, the
movants there had “time and again deployed their lawyers to raise legal roadblocks to
the enforcement of the judgment against them,” and “persistently endeavored to evade
the lawful jurisdiction of the District Court and undermine its careful and determined
work.” Id. Despite Petitioners’ arguments to the contrary, Laos’s behavior in the present
litigation falls far short of the persistent disrespect and noncompliance for which we
and the district court criticized the unsuccessful movants in Uzan. Id. at 128 & n.5.
Finally, we address the interest in finality, which protects the prevailing party’s
(and the courts’) tangible interest in avoiding the costs, uncertainty, and even disrespect
reflected by repeated and otherwise unfounded challenges to its judgments. See House,
688 F.2d at 9 (describing the interest as “ensuring that litigation reaches an end within a
finite period of time”). Given these important interests, the timing of a motion to vacate
37
cannot be “irrelevant” to the calculus, as Laos argues.4 Had ten years elapsed before the
set‐aside proceedings were concluded, and more time elapsed before Laos moved to
vacate the Award, the judicial interests in finality of judgments might well outweigh the
deference to the primary jurisdiction presumptively called for by the New York
Convention. In this case, however, finality interests did not stand in the way of the
District Court’s decision to give effect to the Malaysian set‐aside judgment and to vacate
the District Court’s August 2011 judgment. After all, the party seeking to enforce the
Award (Petitioners) knew proceedings to set aside the Award in the primary jurisdiction
were ongoing before the District Court entered judgment, and the party seeking vacatur
(Laos) sought relief promptly after courts in the primary jurisdiction annulled the
award.
The record in this case, therefore, reflects that the District Court did not exceed
the permissible bounds of its discretion in vacating its August 2011 judgment. The
circumstances potentially bearing on the Rule 60(b) motion, although not explicitly
4 That the timing of the motion to vacate an annulled award properly bears on our analysis here
finds additional support in Article VI of the Convention. Article VI describes the circumstances
in which a party may obtain a stay of enforcement proceedings: it provides that a court
considering an application to enforce an award “may, if it considers it proper, adjourn the
decision on the enforcement of the award and may also, on the application of the party claiming
enforcement of the award, order the other party to give suitable security.” N.Y. Convention art.
VI. Simply by providing a mechanism to stay an enforcement action, Article VI suggests—
contrary to Laos’s contention that timing is “irrelevant” to the Convention’s enforcement
scheme, Appellee Br. 56—that the Convention was not blind to the timing of related actions.
38
addressed by the District Court in its order, do not bar the District Court from vacating
its judgment. Further, no showing has been made that vacatur will offend basic notions
of justice in the United States. Thus, for all these reasons, we affirm the District Court’s
order vacating its judgment confirming the Award.
II. Petitioners’ request for security
Petitioners argue that the District Court should have required Laos to post
security before it granted—or even considered—Laos’s Rule 60(b) vacatur motion.
Petitioners contend that both Rule 60(b) and the New York Convention empower U.S.
courts to require security in these circumstances. Rule 60(b) provides that relief may be
granted “[o]n motion and just terms,” Fed. R. Civ. P. 60(b), terms that our Court has
held to include requiring a bond or security. See First Fidelity Bank, N.A. v. Gov’t of
Antigua & Barbuda—Permanent Mission, 877 F.2d 189, 196 (2d Cir. 1989). Further,
Petitioners observe that Article VI of the New York Convention gives courts in
secondary jurisdictions discretion to order that a party moving to set aside an award
provide “suitable security” before the court stays an enforcement action pending the
issuance of a set‐aside decision in the primary jurisdiction. N.Y. Convention art. VI.
The District Court declined to enter such an order and cited two reasons for its
refusal. First, it ruled that requiring Laos, a foreign sovereign, to post security would be
39
tantamount to directing attachment of Laos’s assets and would therefore violate the
Foreign Sovereign Immunities Act (“FSIA”), see 28 U.S.C. § 1610(a) (providing that
where a foreign sovereign has waived its sovereign immunity, its property may be
attached only if the property is “used for a commercial activity in the United States”).
Thai‐Lao Lignite, 997 F. Supp. 2d at 228‐30. Second, the District Court declared that, even
if there were no FSIA bar, whether to require Laos to post the security was a decision
committed to its discretion and it “would decline to exercise that discretion.” Id. at 229
n.12. On appeal, Petitioners argue that the FSIA posed no bar to requiring security from
Laos and that the District Court should have so required to protect Petitioners’ “rights”
pending resolution of Laos’s motion to vacate the August 2011 judgment. Appellants’ Br.
86.
The District Court made clear that even if the FSIA did not preclude it from
entering such an order, it would decline in its discretion to do so. We identify no abuse
of discretion in that decision and therefore do not address whether the FSIA would bar
the District Court from ordering Laos to post security here. See McCarthy v. S.E.C., 406
F.3d 179, 186 (2d Cir. 2005) (holding that a court “need not reach . . . challenges [when]
an independent ground for [a] decision remains unchallenged”).
40
Accordingly, we affirm the District Court’s order denying Petitioners’ motion for
a security.
III. Petitioners’ action to enforce the English judgment
Before the Malaysian High Court set aside the Award, Petitioners also obtained a
judgment enforcing the Award in England. Petitioners then filed an action before the
District Court seeking enforcement of the English judgment under New York’s Uniform
Foreign Country Money‐Judgments Recognition Act, N.Y. CPLR Art. 53. This Act
provides that “a foreign country judgment,” defined as a “judgment of a foreign state
granting or denying recovery of a sum of money,” N.Y. CPLR 5301, may be enforced by
filing “an action on the judgment,” N.Y. CPLR 5303. Laos did not file an answer or
otherwise appear, and the Clerk of Court for the Southern District of New York entered
a notice of default against it. When Laos later appeared and moved to vacate the
default, the District Court, sua sponte, directed Petitioners to show cause why it should
not dismiss as moot the petition to enforce the English judgment, observing that the
English judgment rested heavily on the English court’s deference to the now‐vacated
August 2011 judgment entered in the United States.
After Petitioners responded, the District Court denied their request to recognize
the English judgment and closed the case. Citing N.Y. CPLR 5304(b)(5), which provides
41
that “[a] foreign country judgment need not be recognized if . . . the judgment conflicts
with another final and conclusive judgment,” the district court ruled that it had the
discretionary authority to credit the Malaysian judgment annulling the Award over the
English judgment enforcing the Award. “[E]quity favors giving the Malaysian judgment
priority over the English judgment,” it concluded, and on that basis it declined to
enforce the English judgment. J.A. 2926.
The English judgment had strong and explicit ties to the District Court’s own
earlier‐entered judgment: the English court noted that the points Laos raised there in
opposition to confirming the Award “were raised in the course of the US
proceedings . . . and, in effect, rejected by the US District Court and the Court of
Appeal[s].” J.A. 1404. Accordingly, the High Court observed that, “as a matter of
English law at least, the conclusion of the US courts on these . . . issues would give rise
to an issue estoppel.” J.A. 1404. These statements underscore the close relationship
between the two decisions and support the District Court’s decision not to enforce the
English judgment.
In their appeal from the District Court’s order denying enforcement of the
English judgment, Petitioners argue that Laos’s default on the English judgment
enforcement action precluded the District Court from considering the merits of
42
Petitioners’ enforcement claim, including Laos’s possible affirmative defenses. The
District Court did not enter a default judgment, however; rather the Clerk of Court for
the Southern District of New York had entered only a notice of default against Laos in
that action. Fed. R. Civ. P. 55(a), (b)(2).
Petitioners further argue that N.Y. CPLR 5304(b)(5)—the ground for non‐
recognition that the District Court invoked here—provides only an affirmative defense
to enforcement; the District Court, they urge, was not entitled to consider it sua sponte. It
is not clear, however, that under New York law the discretionary bases for non‐
recognition of foreign judgments are affirmative defenses. Indeed, the relevant
provision of New York’s Civil Practice Law and Rules can be read to allow courts sua
sponte to consider the grounds for non‐recognition: Section 5304(b)(5) states only that a
foreign judgment “need not be recognized if . . . the judgment conflicts with another
final and conclusive judgment.” N.Y. CPLR 5304(b)(5). Byblos Bank Europe, S.A. v.
Sekerbank Turk Anonym Syrketi, 837 N.Y.S.2d 54 (N.Y. App. Div. 2007), is not to the
contrary; it merely assume that the non‐movant bears the burden of proving a
discretionary basis for non‐recognition, id. at 56. Further, even if the grounds for non‐
recognition should be characterized as affirmative defenses, courts may consider certain
affirmative defenses, such as res judicata and claim preclusion, sua sponte. Walters v.
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Indus. & Commercial Bank of China, Ltd., 651 F.3d 280, 293 (2d Cir. 2011) (“[B]oth the
Supreme Court and the Second Circuit have long held that courts may dismiss actions
on their own motion in a broad range of circumstances where they are not explicitly
authorized to do so by statute or rule.”). Petitioners point to no persuasive authority to
the contrary. We therefore reject Petitioners’ argument.
Finally, Petitioners assert that the District Court abused its discretion when it
concluded that the equities favored crediting the Malaysian judgment over the English
judgment. We agree with the District Court that equity favors giving heavier weight to
the Malaysian judgment—the decision of the primary jurisdiction—over the English,
particularly when the English ruling was so closely related to the District Court’s own
judgment, which had meantime been vacated. We thus conclude that the District Court
did not abuse its discretion in its decision denying enforcement.
Accordingly, we affirm the District Court’s order denying the petition to enforce
the English judgment.
CONCLUSION
For the reasons set forth above, we AFFIRM the orders of the District Court.
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Thai-Lao Lignite (Thailand) Co., Ltd. v. Gov't of the Lao People's
Combined Opinion