[00:00:02] Speaker 00:
Case number 14-70-02 at Elm.

[00:00:05] Speaker 00:
Belize Social Development Limited versus government of Belize Appellate.

[00:00:09] Speaker 00:
Mr. Magid for the Appellate.

[00:00:11] Speaker 00:
Mr. Kimmelman for the Appellate.

[00:01:06] Speaker 06:
Good afternoon, Your Honors.

[00:01:07] Speaker 06:
May it please the Court, I'm Chip Maggott on behalf of the Government of Belize.

[00:01:11] Speaker 06:
If an executive or a member of the executive branch of the United States were to enter into an agreement with a foreign entity and provide that rather than payment in money for the services or goods that that foreign entity might provide, that rather that executive would purport to relieve the foreign entity of an obligation to pay otherwise applicable U.S.

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taxes,

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And if in that agreement there happened to be an arbitration provision, and that an arbitration award was granted saying that money were owed for those US taxes that had been promised to be alleviated or abated, I think it would be difficult to believe that either Congress would stand for that under Article 1, Section 8 of the Constitution, or that this court would stand for such an arbitration award, if that's precisely the situation we face here today.

[00:02:02] Speaker 06:
We have a situation in which the government – not the government of Belize, but a former prime minister of the government of Belize, in secret, enters into a deal and provides that taxes will be abated and duties will be abated, something that he cannot do under Belize's system of law.

[00:02:23] Speaker 06:
Like us, they have separation of powers, and only the Belize legislature has that authority.

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And the evidence that we have about that is the Caribbean Court of Justice decision?

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Or do we have any other evidence?

[00:02:34] Speaker 06:
Yes.

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We submitted a pair of affidavits, Your Honor, attesting to the invalidity under Belize law of those agreements.

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The Caribbean Court of Justice opinion doesn't deal with our specific case.

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But yes, Your Honor, it deals with the parallel circumstances with other parties.

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The affidavits you're talking about,

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make the additional point you've just made, which is it also covers an included arbitration clause?

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Or do they only stand for the proposition that

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that the Attorney General or the President don't have authority to make these kind of tax decisions?

[00:03:12] Speaker 06:
Your Honor, they stand, it really stands for two propositions.

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One is that the President or any executive, including the Attorney General, an executive department employee, do not have the authority to make tax deals, abate taxes.

[00:03:27] Speaker 04:
No, that wasn't the question.

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The question was whether the lack of authority extends to authority to enter into an arbitration agreement.

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Is there anything in the record that suggests the prime minister or the others who entered in this didn't have authority to sign an arbitration agreement?

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That's the question.

[00:03:45] Speaker 06:
Yeah, and I understand your question, Judge Tatel and Judge Carlin.

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I understood the question.

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I don't believe there's anything in the record that says specifically that under no circumstances could an executive of Belize enter into an agreement for posting.

[00:04:01] Speaker 04:
I'm sorry.

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And in fact, this issue was decided

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By the arbitration panel, right?

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The arbitration panel found that there was authority to enter into an arbitration agreement.

[00:04:12] Speaker 06:
It did, Your Honor.

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Our position, however, is that that is not a question for the arbitration panel, if there is no valid agreement.

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But you just told me this.

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You have nothing in the record to indicate that they did not have authority to sign the arbitration agreement.

[00:04:29] Speaker 06:
Well, under the law of the FSIA, unlike the FAA, upon which the Judge Leon lied, there is nothing that, it's very clear that the agreement is taken as a whole.

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You don't, there is no severability under the FSIA.

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Well, but the statute only focuses on, I mean, this is just a question of statutory interpretation, that is,

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You know, the only thing you need for FSI jurisdiction is an agreement to arbitrate, and if an agreement to arbitrate, if they had authority to enter into an agreement to arbitrate, and you don't deny that,

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or you don't find anything in the record, I guess I don't see how that affects FSI jurisdiction.

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Well, with great respect, Judge Tatel, the arbitration provision in the FSIA, we're looking at 28 USC 1605 A6, provides first, in the first paragraph of A6, that there is no immunity from

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or there's no immunity from the jurisdiction of the courts of the United States, if there is an action brought to enforce, and I'm paraphrasing here, or confirm, quote, an agreement made by the foreign state.

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But there is no agreement made by the foreign state.

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That is precisely our point.

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And unlike the Federal Arbitration Act... But there is.

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They agreed to arbitration.

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You say the agreement they signed, which you said they didn't have authority to do, includes an arbitration agreement.

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An arbitration provision, does it?

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No.

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Your Honor, there are two separate questions there.

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One is, would it be possible, under some circumstance, to enter into an arbitration agreement so if the executive says, we're going to buy light bulbs for the executive office building of a presidential palace, there perhaps could be an arbitration provision.

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But where the executive has no authority to enter into an agreement, the entire agreement, including the arbitration provision, is void.

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And the error of the court below was in looking not to the FSIA, but rather in looking to the Federal Arbitration Act to bring in this notion of severability that you look at the arbitration provision itself and see whether there was authority to enter into that.

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under the F.S.I.A.

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that's currently turned on, then, is the question of whether the arbitration agreement can be separately construed, uh,

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the underlying agreement under the FSI.

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That is a critical question, Your Honor, yes.

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That is the critical question, isn't it?

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Well, I would say that there are others, including the fact that under the New York Convention, this is not a commercial contract which involves subpart B, and I'm talking capital B, under 1605A6.

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But the sovereign immunity question, actually, when I think about this, the statute has to be an agreement to submit to arbitration, right?

[00:07:35] Speaker 03:
That's what you just told me.

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It has to be an agreement to submit to arbitration, right?

[00:07:39] Speaker 06:
It has to be an agreement made by the foreign state.

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Yes.

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Yes.

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To submit to arbitration.

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No, it's talking about enforcing the entire agreement.

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With or for the benefit of a private party to submit to arbitration,

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Or is that right?

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You were quite right.

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OK.

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So the question is, your question is whether the foreign state, the people who signed for the foreign state, had the authority to sign an agreement submitting something to arbitration.

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That's your argument.

[00:08:11] Speaker 01:
It is your argument.

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Now, Judge Tatel asked you whether there was sort of contrary authority in the arbitrator's decision.

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And you suggested that there was, but all I find in the arbitrator's decision is that the attorney general and the president have authority to make decisions on behalf of the government.

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It doesn't say whether they have authority to make this kind of decision or whether the government can make this kind of decision.

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That's correct.

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So is there anything in the record at all on the question that's actually before us, which is whether there's authority to enter into an arbitration agreement?

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I don't believe there is any separate authority, but what the authority is, is that an executive cannot enter into any agreement, arbitration agreement or otherwise.

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You're just saying this.

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I mean, you don't have an affidavit of a constitutional expert about beliefs or anything else on that subject.

[00:09:11] Speaker 06:
I don't, Your Honor.

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The simple reason that there could be circumstances in which an executive, as I said, could enter into an agreement that contained an arbitration provision.

[00:09:22] Speaker 03:
Right, but your position is that the executive, and it's not a reasonable position, your position is that the executive can't enter into an agreement to arbitrate

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an agreement that it never had the authority to enter into in the first place.

[00:09:35] Speaker 06:
That's correct.

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Let me ask you.

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So what about paragraph 55 of the Caribbean Court of Justice's decision, where the Caribbean court says that they had the authority to enter into the agreement, but then they say, at the bottom of Appendix 620,

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The latter, there's also the fact here that the state treated with indifference to arbitral process.

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That is, the state didn't participate in the arbitration.

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It says, the latter was contractually bound by the warranties of the former, provided the implementation of those warranties were not a law, et cetera.

[00:10:11] Speaker 03:
Then it says, the agreement to arbitrate was a freestanding agreement, separable from the remainder of the deed, and it's unfortunate that the government approached its obligations under that agreement in the way it did.

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Is this a statement that had they challenged the arbitration agreement rather than it not showing up that they might have a different claim?

[00:10:39] Speaker 06:
You know, I hate to speak for the Caribbean Court of Justice.

[00:10:41] Speaker 03:
Yes.

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What's your interpretation of it?

[00:10:43] Speaker 06:
My interpretation is not that it's really speaking to the specific set of agreements for the CCJ in that case, but that... And that's not disagreement?

[00:10:55] Speaker 03:
I'm sorry?

[00:10:55] Speaker 03:
That wasn't disagreement?

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That what?

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That... Was that disagreement or not?

[00:11:02] Speaker 06:
I don't believe it was, Your Honor.

[00:11:03] Speaker 03:
It's a different agreement.

[00:11:05] Speaker 03:
Yes, sir.

[00:11:05] Speaker 03:
I see.

[00:11:07] Speaker 03:
Let me ask one more sort of cleanup question, which I don't quite get.

[00:11:10] Speaker 06:
Of course, sir.

[00:11:10] Speaker 03:
In the agreement, the telecommunications agreement, at appendix 147, it says the government irrevocably and unconditionally waives any right of immunity.

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Right.

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Why aren't we looking at that?

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aspect of sovereign immunity of the Foreign Sovereign Immunities Act, the waiver of sovereign immunity, rather than the arbitration provision.

[00:11:35] Speaker 06:
Again, because there's no power to do that, we have what we believe was a corrupt prime minister in cahoots with Ward Ashcroft and his entities coming up with a sweetheart deal for Ward Ashcroft.

[00:11:46] Speaker 07:
You're going beyond what you have to go when you say that we don't have to believe that there's sweetheart deals or that he's corrupt in any other fashion.

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Your whole point is whether he had the authority by law to enter the agreement.

[00:12:00] Speaker 06:
Absolutely, Your Honor.

[00:12:01] Speaker 07:
Even if he were otherwise as pure as driven snow or slush or whatever, your point is that he didn't have the authority.

[00:12:08] Speaker 03:
It is, Your Honor.

[00:12:09] Speaker 03:
And does that include for you to waive cyber immunity?

[00:12:13] Speaker 06:
Absolutely you're up.

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Otherwise we'd have the same situation as in the hypothetical I gave you.

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You have a rogue employee who, without authority, purports to bind the sovereign.

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And you cannot do that in the case of Belize.

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And in my hypothetical, it could not be done on the part of the United States.

[00:12:29] Speaker 01:
Further questions from the mid?

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No?

[00:12:32] Speaker 01:
No.

[00:12:32] Speaker 01:
Thank you.

[00:12:46] Speaker 05:
Good afternoon, Your Honors.

[00:12:47] Speaker 05:
Lewis Kimmelman on behalf of the Apple Police Social Development Limited.

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Your Honors, the contract that was described to the court is not the contract in this record.

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The contract in this record that has an arbitration clause that the government never challenged ever in the district court or in its briefs before your court specifically,

[00:13:08] Speaker 07:
They challenged the whole agreement.

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That includes the arbitration agreement.

[00:13:15] Speaker 05:
Is the arbitration agreement another document?

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The arbitration agreement is a severable contract.

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but as a matter of the U.S.

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law?

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Yes, Your Honor, it's signed by the two highest officials of Belize, the Prime Minister and the Attorney General.

[00:13:35] Speaker 05:
Your Honor, that's not what the agreement's about.

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The agreement's about, and that's what...

[00:13:42] Speaker 07:
I'm sorry?

[00:13:43] Speaker 07:
You brought them up, but you told me what high officials there were.

[00:13:46] Speaker 05:
I'm trying to find out how high the individuals were.

[00:13:47] Speaker 05:
Well, they're the highest officials.

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They're the highest officials in the government, and this is agreement.

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I'm sorry?

[00:13:53] Speaker 05:
In the executive branch.

[00:13:55] Speaker 07:
Correct.

[00:13:56] Speaker 07:
Does Belize have separation of power?

[00:13:58] Speaker 05:
It does.

[00:13:59] Speaker 05:
It has the legislature, Your Honor.

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And this contract is an accommodation that was made at the request of the government.

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The government was selling real estate,

[00:14:07] Speaker 02:
to a private party that... Was it made at the request of the legislature?

[00:14:10] Speaker 05:
I'm sorry?

[00:14:11] Speaker 02:
Was it made at the request of the legislature or the executive branch?

[00:14:14] Speaker 05:
That's not in the record, Your Honor.

[00:14:16] Speaker 05:
I believe it was a request by the government, by the executive, which the executive typically does is to buy and sell assets.

[00:14:23] Speaker 03:
Let me see if I can make a sharpened hypothetical, a sharpening of the one raised by opposing counsel.

[00:14:32] Speaker 03:
Imagine that the president

[00:14:34] Speaker 03:
in order to get good communications, telecommunications in the United States, President of the United States entered into a contract with a foreign telecommunications company.

[00:14:43] Speaker 03:
which said, we want you to do this and in exchange for that we're going to give you a certain amount of money and because you are from a country that doesn't have the same anti-discrimination laws as you do, I am suspending the Title VII and you should feel free to discriminate against any American employee in the United States on the basis of race, sex, religion, etc.

[00:15:06] Speaker 03:
And we're going to have an arbitration clause, which says that that issue can be arbitrated, or that the contract as a whole, including its validity, can be arbitrated by, I don't know, some panel in Europe, the London... Court of International... Court of International, exactly.

[00:15:24] Speaker 03:
Would that, would the president have validity authority, would that be a contract entered into by the foreign state, the United States?

[00:15:35] Speaker 05:
Well, Your Honor, to answer that question, I would have to look to the stat to the law of the United States.

[00:15:41] Speaker 05:
And just to answer, to bring it down to this case, Your Honor asked about the CCJ decision, and I'd like to refer Your Honor to it.

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I need you to get this one.

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In fact, let's say further, the contract further says not only does Title VII doesn't apply, but the Constitution of the United States doesn't apply.

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You should feel free to violate the Constitution of the United States if you wish,

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in your treatment of employees.

[00:16:01] Speaker 03:
Now, does the President have authority to enter into a contract like that, including the arbitration part of it?

[00:16:12] Speaker 05:
Well, Your Honor, if the contract like this one

[00:16:17] Speaker 05:
had representations and warranties that say the parties of both sides.

[00:16:22] Speaker 07:
You're fighting the hypothetical.

[00:16:23] Speaker 07:
I'm sorry?

[00:16:23] Speaker 07:
You're fighting the hypothetical.

[00:16:25] Speaker 05:
No, I'm not, Your Honor.

[00:16:26] Speaker 05:
I know for a fact that the Supreme Court has said in one case that Title VII specifically

[00:16:33] Speaker 05:
does not have extraterritorial effect.

[00:16:36] Speaker 03:
I'm saying it's not going to be extraterritorial.

[00:16:37] Speaker 03:
It's going to be in the United States.

[00:16:38] Speaker 03:
In the United States?

[00:16:39] Speaker 03:
Yes.

[00:16:39] Speaker 03:
In other words, they enter into an agreement that says, the President of the United States says, we need your telecommunications company badly.

[00:16:47] Speaker 03:
We will allow you to violate the Constitution of the United States to get this job done.

[00:16:52] Speaker 03:
In fact, I don't know, add in the takings clause.

[00:16:54] Speaker 03:
And you can seize any property in the United States that you want without just compensation.

[00:16:59] Speaker 03:
Now, and we're going to have an arbitration clause.

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And I'm entering into an arbitration clause allowing arbitrators to decide the validity of my, the President's decision that you can violate the Constitution.

[00:17:11] Speaker 03:
That can't possibly be something that would be an agreement made by the United States, right?

[00:17:18] Speaker 03:
That would be an invalid agreement under any theory.

[00:17:20] Speaker 05:
I believe the contract as a whole, you're correct, would be valid, unenforceable.

[00:17:25] Speaker 03:
Including the agreement to arbitrate that point, right?

[00:17:29] Speaker 05:
I don't think the agreement to arbitrate would necessarily be invalid in your hypothetical.

[00:17:36] Speaker 03:
My hypothetical is that the president agrees to arbitrate the constitutionality of actions against American citizens.

[00:17:49] Speaker 03:
That that's not to be decided by the courts of the United States, but to be decided by the London Tribunal.

[00:17:54] Speaker 05:
Correct, Your Honor.

[00:17:54] Speaker 03:
And you think that would be valid?

[00:17:56] Speaker 05:
Well, Your Honor, under Mitsubishi, it's my understanding that as of today,

[00:18:00] Speaker 05:
The Supreme Court has said that absent Congress stating specifically in a statute that a subject matter is not subject to arbitration, it is arbitrable because, as the Court knows, we've gone through the litany of cases from antitrust to securities law violations to RICO violations and all of those, although they involve very important issues.

[00:18:24] Speaker 05:
including labor law issues, unless Congress says this is not arbitrable.

[00:18:29] Speaker 07:
Did any of them involve the question of whether an

[00:18:34] Speaker 07:
agreement that was otherwise alter virates could include an enforceable arbitration?

[00:18:40] Speaker 05:
No, Your Honor, they did not.

[00:18:41] Speaker 07:
And that's the question before us.

[00:18:43] Speaker 05:
But Your Honor, it's not.

[00:18:44] Speaker 05:
Because let me just go back.

[00:18:45] Speaker 05:
It's not?

[00:18:46] Speaker 05:
Chief Judge O'Garland, you asked about the CCJ opinion.

[00:18:49] Speaker 05:
It's in the record.

[00:18:50] Speaker 05:
It's not about this contract.

[00:18:51] Speaker 05:
It's not about these specific parties.

[00:18:53] Speaker 05:
It's not about this arbitration.

[00:18:55] Speaker 05:
But I direct your attention.

[00:18:57] Speaker 05:
You

[00:19:00] Speaker 05:
to paragraph 38, which is on the record on page 615.

[00:19:05] Speaker 05:
This is what the CCJ said about a challenge to a different contract where the argument was made by the government that the Prime Minister and the Attorney General did not have the authority to enter into the contract.

[00:19:19] Speaker 05:
And let me just read it.

[00:19:20] Speaker 05:
This is the CCJ, the highest court he believes, paragraph 38 at the top of the page.

[00:19:26] Speaker 05:
We agree that the minister does indeed possess wide prerogative powers to enter into agreements.

[00:19:32] Speaker 05:
The executive may do so even when those agreements require legislative approval before they can become binding on the state.

[00:19:41] Speaker 05:
This was also the opinion of the Eastern Caribbean Court of Appeal

[00:19:45] Speaker 05:
in the St.

[00:19:45] Speaker 05:
Lucian case of the attorney general versus Francois, an authority cited by the tribunal, meaning the arbitral tribunal.

[00:19:53] Speaker 05:
The judge's focus, however, ought logically to have extended beyond the issue of whether it was lawful to make the premises, the promises, I'm sorry, the making of a government contract may be a matter quite distinct from its enforceability against the state, as the Francois case also demonstrates, close quote.

[00:20:12] Speaker 05:
The CCJA decision did not determine whether any contract entered into by the Prime Minister was legal or illegal.

[00:20:20] Speaker 05:
The only issue before it was under the equivalent of the New York Convention was that arbitration award.

[00:20:28] Speaker 05:
in favor of the private party and against the state, was it enforceable as a matter of Belize public policy?

[00:20:35] Speaker 05:
And the court here concluded that as a matter of Belize public policy, the award was not enforceable, but its own language confirms that the executive in Belize, as in other Caribbean islands, has wide prerogative powers to enter into agreements even when those agreements may require legislative approval to be enforced.

[00:20:56] Speaker 05:
Enforcement is a different issue from the issue of the legality of the contract.

[00:21:01] Speaker 05:
And so the very authority that the government relies on here, in fact, undermines its position.

[00:21:08] Speaker 05:
The claim in this case is that the accommodation agreement is void of an issue.

[00:21:13] Speaker 05:
It's illegal.

[00:21:14] Speaker 05:
It's against Belize law.

[00:21:16] Speaker 05:
However, the record, however, that issue under U.S.

[00:21:20] Speaker 05:
law is clearly an issue for the arbitral tribunal.

[00:21:23] Speaker 05:
And Belize never challenged

[00:21:26] Speaker 05:
the enforceability or the legality of the arbitration clause, which was the basis upon which the Tribunal ruled.

[00:21:33] Speaker 04:
Your Honor.

[00:21:35] Speaker 04:
When you first stood up here, you made a statement about Belize's position in the district court here.

[00:21:43] Speaker 04:
What was its position there?

[00:21:44] Speaker 04:
The position in the district.

[00:21:46] Speaker 04:
It didn't participate in the arbitration at all.

[00:21:49] Speaker 04:
Correct.

[00:21:49] Speaker 04:
So what was its position in the district court with respect to the arbitration clause?

[00:21:54] Speaker 05:
from the beginning of the proceedings in federal court in the lower court, their position was the accommodation agreement is illegal

[00:22:05] Speaker 05:
It is contrary to Belize law and public policy and it is void ab initio.

[00:22:09] Speaker 05:
There is nothing in its motion to dismiss or in its opposition to our petition to confirm that says specifically that anyone did not have authority to enter into the arbitration agreement which was the basis for the tribunal's jurisdiction.

[00:22:26] Speaker 05:
And in fact, that argument does not surface until the course of the briefing before this court.

[00:22:31] Speaker 05:
And so when you look at the district court's decision, which frankly addresses every point that was made by the government, you won't find this argument because it wasn't made.

[00:22:41] Speaker 05:
In fact, an argument that was made that the district court dealt with was an argument called, the argument was that we, black standing.

[00:22:50] Speaker 04:
In the district court, in response to Belize's argument that this contract was

[00:22:55] Speaker 04:
was invalid.

[00:23:00] Speaker 04:
Did you respond, perhaps so, but the question is the authority to enter into the arbitration clause?

[00:23:07] Speaker 04:
Yes, Your Honor.

[00:23:08] Speaker 04:
And did Belize respond to that?

[00:23:10] Speaker 05:
Their response back was that the agreement as a whole is illegal and void of an issue.

[00:23:21] Speaker 05:
They never met us, and there is no evidence in the record.

[00:23:25] Speaker 05:
as to any official in Belize not having authority to sign, to enter into an arbitration clause.

[00:23:33] Speaker 05:
As a matter of fact, in the record, and this is interesting, if you take a look at page 576 to 580, here's a chart.

[00:23:49] Speaker 05:
576 to 580.

[00:23:51] Speaker 05:
This is the last filing that was made by the government before the district court, after the case was remanded from this court pursuant to the mandamus decision.

[00:24:03] Speaker 05:
And you'll see on 576 through 580, there's a chart.

[00:24:10] Speaker 05:
And what the chart... Oh yeah, so that's the JA page.

[00:24:16] Speaker 05:
It's 0576 at the bottom.

[00:24:19] Speaker 05:
through 0580.

[00:24:22] Speaker 05:
And this is a chart.

[00:24:28] Speaker 05:
This is the government's submission to the district court.

[00:24:31] Speaker 05:
It lists every item on the left side and the reason that it's allegedly illegal next to it, and then an explanation in the third column.

[00:24:42] Speaker 05:
And you'll see that although this contract has many provisions,

[00:24:45] Speaker 05:
The arbitration clause is not mentioned anywhere in this chart.

[00:24:48] Speaker 05:
There is no suggestion that there is anything unauthorized, illegal, improper, or invalid about the arbitration clause.

[00:24:57] Speaker 07:
And one thing is... I think we're still arguing past each other, and one of you is right or wrong, one of you isn't, maybe you're both wrong, I don't know, but I think their position would be that if they have demonstrated the invulnerability of the agreement which contains the arbitration clause, then that might

[00:25:17] Speaker 07:
with so that what you're saying about the chart is not material to whether they have raised the issue that's going to govern the case.

[00:25:25] Speaker 05:
Your Honor, I think that is what they are arguing, but our position is that's not the law.

[00:25:30] Speaker 05:
I understand that.

[00:25:30] Speaker 05:
The law is to the contrary, and it's to the contrary in two respects.

[00:25:34] Speaker 04:
I thought your argument was they didn't argue this in the district court.

[00:25:37] Speaker 04:
I'm sorry?

[00:25:38] Speaker 04:
Didn't you just tell me, I thought your argument was they didn't argue this in the district court.

[00:25:42] Speaker 04:
Yes.

[00:25:42] Speaker 07:
You just said they didn't raise it in the district court.

[00:25:44] Speaker 07:
The demonstration of that was that they didn't have a specific element of their chart that addressed the arbitration agreement.

[00:25:53] Speaker 07:
However, if their argument is that the arbitration agreement is invalid because the containing agreement is invalid, then they did raise the dispute.

[00:26:01] Speaker 05:
no your honor because that doesn't mean you lose if you say yes to that no no i understand your i understand that's their argument that if the agreement is illegal the arbitration but that's not the law that's that's the only argument my point was they did not attack or challenge the arbitration clause specifically if they're correct that it falls with the agreement

[00:26:23] Speaker 07:
then they didn't have to raise it separately.

[00:26:25] Speaker 05:
If that were true, that's right, but what we did... So your point is not based on they're not raising it below.

[00:26:30] Speaker 07:
It's simply a point that they're wrong, is your argument.

[00:26:33] Speaker 05:
Well, they're wrong, but because they're wrong and the law is clear that you do have to challenge it, the fact that they didn't challenge it specifically... But that's a different question.

[00:26:43] Speaker 07:
Their position is they did challenge it because they depressed the attack of the whole agreement.

[00:26:49] Speaker 07:
Understood.

[00:26:49] Speaker 07:
Now, they're right or wrong on that, but that doesn't mean they didn't raise the issue.

[00:26:53] Speaker 07:
They raised it.

[00:26:53] Speaker 07:
They just didn't raise it in your form.

[00:26:55] Speaker 07:
They raised it in their form.

[00:26:57] Speaker 05:
Yes, they raised it in the form which we believe is contrary to what's appropriate.

[00:27:01] Speaker 05:
Okay.

[00:27:01] Speaker 05:
Okay.

[00:27:01] Speaker 05:
But they're two separate issues here.

[00:27:03] Speaker 05:
One is the sovereign immunity issue.

[00:27:05] Speaker 05:
And the point I wanted to make is that 1605A6 is not about the agreement as a whole.

[00:27:12] Speaker 05:
The exception to immunity is very specific.

[00:27:14] Speaker 05:
Congress was very specific about this, and this is an amendment that was made in 1988 to the FSIA.

[00:27:20] Speaker 05:
It's after the statute had been enforced for a number of years.

[00:27:23] Speaker 05:
All that's required is an agreement to submit to arbitration.

[00:27:28] Speaker 05:
That's the only thing that has to be shown, and that the agreement to submit to arbitration is subject to a treaty calling for the enforcement, for the recognition and enforcement of arbitration awards.

[00:27:40] Speaker 07:
Isn't it implicit that that would have to be a valid arbitration agreement?

[00:27:46] Speaker 05:
I think it has to be a valid arbitration agreement, but the required showing that we were required to make was that there wasn't an arbitration agreement signed by the government, entered into by the government, covered by the New York Convention, and we did that.

[00:28:02] Speaker 05:
And their burden under the law of this circuit is that if they're going to challenge that exception,

[00:28:07] Speaker 05:
that they have to come forward with evidence.

[00:28:09] Speaker 05:
And this goes to the point I was making before.

[00:28:10] Speaker 05:
They didn't come forward with any evidence that the agreement to arbitrate as required by 1605A6 was in any way improper or invalid or unenforceable.

[00:28:24] Speaker 03:
Why is there no reliance on the waiver of sovereign immunity in the agreement?

[00:28:30] Speaker 05:
Because, Your Honor, the waiver of sovereign immunity in the agreement is a waiver of sovereign immunity specifically to the party with whom the government contracted in 2005.

[00:28:42] Speaker 05:
And as the court may recall, the monetary portion of the award was assigned after the award was rendered.

[00:28:49] Speaker 05:
And so we think that provision is significant to the commercial nature of the transaction, but it's not the basis on which we asserted the exception to immunity in this court.

[00:29:03] Speaker 03:
Thank you.

[00:29:03] Speaker 05:
Time left?

[00:29:07] Speaker 03:
No.

[00:29:07] Speaker 03:
All right.

[00:29:08] Speaker 03:
We'll give you two minutes.

[00:29:09] Speaker 03:
I'd like to give everybody else.

[00:29:14] Speaker 06:
Thank you, Your Honor.

[00:29:17] Speaker 06:
Chief Judge Garland, I think you really hit it on the nail on the head when you gave your hypothetical, which is a vast improvement on my hypothetical.

[00:29:24] Speaker 06:
Essentially what BSDL here is asking is to say, even if that were the case, as long as there's an arbitration provision,

[00:29:32] Speaker 03:
and an award from an arbitral body that a district court in the United States is essentially bound to accept that agreement, with the possible exception of a couple of the enumerated... I take their argument to be that there are some things that somebody can agree to arbitrate, even if they don't have authority, some that they can't, and what's missing, and maybe you're right about this, but you didn't come forward with any specific evidence about authority to entering arbitration agreements.

[00:30:02] Speaker 06:
Well, I think the Young and the Gandhi affidavits which we provided explain – I'm going to view it more negative versus positive here.

[00:30:10] Speaker 06:
They show that where legislative act is required, as in the area of taxation, there is no authority.

[00:30:16] Speaker 06:
The executive, on the other hand, would not necessarily need legislative approval to go out and buy gas for a fleet of trucks or something like that.

[00:30:27] Speaker 06:
You know, there are certain things that the executive could do.

[00:30:30] Speaker 06:
But it's plain here when we're talking about tax abatement and abatement of duties that only the legislature can do that.

[00:30:40] Speaker 06:
Now, Mr. Kimmelman tries to draw the distinction and says, well, the CCJ says that the executive can enter into that agreement even if the legislature subsequently has to approve it before it becomes valid.

[00:30:53] Speaker 06:
That argument becomes a little bit circular.

[00:30:54] Speaker 06:
Yes, it's possible just as our executive branch can enter into treaties and the rest that require congressional approval before Congress approves them, but that doesn't mean that they're valid until and unless Congress goes ahead and approves them.

[00:31:08] Speaker 06:
That's the problem here.

[00:31:09] Speaker 06:
There is no valid agreement.

[00:31:11] Speaker 06:
And therefore, there is no valid agreement to arbitrate, and there is no act of a foreign state.

[00:31:19] Speaker 06:
You know, as we made very clear, you know, unless there's actual authority – you know, Knuth makes this point from the Ninth Circuit – unless there's actual authority to enter into that agreement, which plainly there is not here, there is no act by the government.

[00:31:35] Speaker 06:
And therefore, the very first sentence of 1605A6 doesn't apply.

[00:31:43] Speaker 06:
There is no agreement made by the foreign state.

[00:31:46] Speaker 06:
It matters not whether within that there's an arbitration clause or not.