[00:00:01] Speaker 00:
Case number 15-7121, Inrun, Nigeria, powerholding LTD versus Federal Republic of Nigeria appellant.

[00:00:09] Speaker 00:
Mr. Elisimogun for the appellant.

[00:00:11] Speaker 00:
Mr. Barrett for the appellee.

[00:00:13] Speaker 00:
Good morning.

[00:00:14] Speaker 05:
Good morning, Your Honor.

[00:00:18] Speaker 05:
My name is David Elisimogun, appearing for the Federal Republic of Nigeria.

[00:00:23] Speaker 05:
I'd like to reserve three minutes for rebuttal.

[00:00:28] Speaker 05:
Your Honor, the main issue before this Court this morning is whether confirming and enforcing the award that the ICC granted the appellee in this matter would amount to rewarding fraud or rewarding his representation, which violates a public policy of the United States that no one should be allowed to profit from his own fraud or acquire property thereby.

[00:00:58] Speaker 02:
Didn't the ICC make factual findings on your fraud claims?

[00:01:05] Speaker 02:
And they found that there was no fraud, right?

[00:01:09] Speaker 05:
Those are their factual findings.

[00:01:13] Speaker 05:
When the ICC made that ruling in the initial, it gave several interim awards, the award on liability.

[00:01:23] Speaker 05:
When it made that final, when it came to the final award, it appeared as if the ICC itself was contradicting its stance on the effect of Enron Corporation, the effect it had on the... If we didn't read it that way, let's suppose we read it.

[00:01:38] Speaker 02:
that in fact the ICC did not find fraud here.

[00:01:45] Speaker 02:
We're bound by that, aren't we?

[00:01:47] Speaker 02:
Under the New York Convention, under fundamental law, we are bound by factual findings.

[00:01:53] Speaker 05:
Well, Your Honor, the fraud in this question is already fraud that's already been established in the United States, the Aaron scandal.

[00:02:03] Speaker 02:
That's- No.

[00:02:05] Speaker 02:
If the ICC says there's no fraud, we don't have any jurisdiction to review that.

[00:02:13] Speaker 02:
That's about the most fundamental point of arbitration agreements, right?

[00:02:19] Speaker 02:
Yes, Your Honor.

[00:02:20] Speaker 02:
Yes, Your Honor.

[00:02:22] Speaker 04:
You may not want to concede that too readily.

[00:02:25] Speaker 05:
No, that's why I'm trying to refer, Your Honor, to the fact that when it was given the liability award itself, when we read, because you have, we're asking the court to look at the entirety of the case, look at the factual conclusions that the ICC came to itself.

[00:02:45] Speaker 05:
In fact, it got to a stage in their conclusions that they were doing this dance.

[00:02:51] Speaker 05:
between the scandal of errors.

[00:02:53] Speaker 02:
So you're saying a fair reading of what the ICC did does not lead to the conclusion that they found it's a factual matter, that the factual basis for your fraud claim didn't exist.

[00:03:06] Speaker 05:
That's what you're saying.

[00:03:09] Speaker 05:
Your Honor, may I refer this court to the final award that especially is in the joint appendix

[00:03:18] Speaker 05:
Paragraph 103 in the Joint Appendix.

[00:03:21] Speaker 05:
And here are some of the conclusions that the ICC itself came to.

[00:03:25] Speaker 05:
And if you will permit me to just read it out in their own very words.

[00:03:30] Speaker 05:
Most significant was the subsequent bankruptcy of Heron Corporation.

[00:03:34] Speaker 05:
Enron International and EEC.

[00:03:37] Speaker 05:
This substantially changed many of the assumptions on which the original PPA schedules were based, including, in particular, EMPH's ability to perform the contract.

[00:03:48] Speaker 05:
The judicial notice can be taken of the fact that the Enron scandal was based on misrepresentation of its finances.

[00:03:58] Speaker 05:
To the general public, the SEC that was regulating it itself was hoodwinked.

[00:04:03] Speaker 04:
No, but let me ask.

[00:04:06] Speaker 04:
You go.

[00:04:06] Speaker 04:
Sorry.

[00:04:07] Speaker 04:
Reading the record, assuming everything you say is correct.

[00:04:13] Speaker 05:
Yes, ma'am.

[00:04:14] Speaker 04:
I thought the ICC had decided that or had found that whatever was going on with the Enron Corporation was not material to the agreement at issue here.

[00:04:33] Speaker 04:
that the agreement called for finding independent sources for financing, et cetera, and that no representation was made in the party's agreement that Enron Corporation itself would somehow back up

[00:04:53] Speaker 04:
the agreement financially or materially or in any other way?

[00:04:58] Speaker 05:
Again, I would like to refer you to how the ICC itself was surprised that when AES that had the opportunity of exercising the option agreement reached out to BNPH, that's the appellee in this case,

[00:05:18] Speaker 05:
ENPH could not respond for three years because of the Erron scandal.

[00:05:23] Speaker 05:
In fact, if we go to the joint appendix, page 8212, specifically paragraph 119,

[00:05:34] Speaker 05:
The court itself said, acknowledged the fact that it was a surprise that for three years, nothing could be done because the bankruptcy was taking place.

[00:05:44] Speaker 05:
Everyone that would have made a decision in this matter was involved in the bankruptcy.

[00:05:51] Speaker 05:
During the PowerPoint presentation to the president of the Federal Republic of Nigeria, one of the strong points that ENPH really pushed was that, look,

[00:06:00] Speaker 05:
Enron has $30 billion in annual revenue.

[00:06:04] Speaker 05:
We are the leading corporation in gas and electricity.

[00:06:08] Speaker 05:
These representations were made.

[00:06:09] Speaker 05:
There was nothing said about ENPH.

[00:06:12] Speaker 05:
ENPH was just barely formed four months ago.

[00:06:16] Speaker 05:
There was no basis for Nigeria to have entered into a contract with ENPH.

[00:06:21] Speaker 05:
The World Bank and everybody that looked at this deal was actually seeing Enron.

[00:06:26] Speaker 05:
When Enron's bankruptcy came through,

[00:06:28] Speaker 05:
The whole transaction stopped.

[00:06:31] Speaker 05:
There was no communication between the parties for three years.

[00:06:35] Speaker 05:
ENPH could not proceed with the contract, and the ICC itself acknowledged this at every step of the way.

[00:06:45] Speaker 05:
Initially, when it was

[00:06:47] Speaker 05:
When he was given the award, he said, no, ENPH and Endron are totally separate corporations.

[00:06:53] Speaker 05:
But when it came to the liability, it found itself in a bind.

[00:06:57] Speaker 05:
It found itself in a bind to separate the two corporations.

[00:07:05] Speaker 05:
Nigeria has made the argument that ENPH and Enron were basically one and the same company.

[00:07:11] Speaker 05:
That was Enron's mode of operation back in the heydays.

[00:07:16] Speaker 05:
It would create the special purpose vehicles.

[00:07:19] Speaker 05:
There were shell corporations.

[00:07:20] Speaker 05:
It ran the corporations.

[00:07:23] Speaker 05:
The people who negotiated the deal were all staff of Enron.

[00:07:26] Speaker 05:
Everything was Enron.

[00:07:28] Speaker 05:
ENPH was simply Enron in another suit.

[00:07:32] Speaker 05:
There was no difference.

[00:07:34] Speaker 05:
As soon as the bankruptcy of Errol came through, the project could not go further.

[00:07:41] Speaker 05:
Even when AES approached and said, look, we want an extension of the option for three years, it was silent.

[00:07:50] Speaker 05:
Because everyone that was involved in this deal

[00:07:53] Speaker 05:
was dealing with the Enron scandal.

[00:07:57] Speaker 05:
There was no way it could have gone through.

[00:07:58] Speaker 05:
Allowing ENPH, a subsidiary of Enron, a share corporation that never, share capital of $1,000 that had never done any deal at all.

[00:08:09] Speaker 04:
So let me go back to the point Judge Griffith was exploring with you.

[00:08:16] Speaker 04:
In your view then, in our review of the district court's decision,

[00:08:22] Speaker 04:
What is the standard we are to apply to the findings by the ICC?

[00:08:33] Speaker 04:
In other words, your argument sounds like you're treating the ICC almost as though it were a district court, and we're reviewing those findings to see if there was an error of law or a clear error of fact.

[00:08:53] Speaker 05:
You are to review the district court's opinion.

[00:08:57] Speaker 05:
And the district court, in its opinion, has said it appears as if Nigeria is trying to use this opportunity to re-litigate the issues that have already been settled.

[00:09:08] Speaker 04:
In other words, you have not argued, as I understand it, that there was anything fraudulent or corrupt in the ICC proceeding itself.

[00:09:21] Speaker 04:
For example, there was no conflict of interest among the... Oh, no, no, no.

[00:09:27] Speaker 04:
Exactly.

[00:09:28] Speaker 05:
Our arguments are based on Article 5 2B of the New York Convention.

[00:09:34] Speaker 04:
I understand.

[00:09:35] Speaker 04:
And I need to understand, and I thought that's what Judge Griffith was asking you, is what do you understand our standard of review to be of the ICC findings?

[00:09:47] Speaker 04:
And you sort of made two arguments.

[00:09:50] Speaker 04:
One is that they never made the findings that there was no fraud, that if you look at the several opinions that they issued, they were confounded by what happened once Enron declared for bankruptcy, realizing that that undercut the whole deal.

[00:10:08] Speaker 04:
But they never found, did they, that

[00:10:13] Speaker 04:
They never made the finding you're asking us to say they should have found.

[00:10:20] Speaker 04:
And that's why I need to understand what is our standard of view in your opinion.

[00:10:25] Speaker 05:
Well, in my opinion, I reviewed the award and how they arrived at it.

[00:10:36] Speaker 05:
And when I reviewed the analysis and the conclusions,

[00:10:39] Speaker 05:
of the ICC, I saw that they acknowledged the effect Arrows Bankruptcy had on the entire transaction.

[00:10:48] Speaker 05:
That Arrows Bankruptcy, which judicial notice can be taken of, was as a result of fraud.

[00:10:55] Speaker 04:
So is your point that this court, as the district court, has jurisdiction to consider whether the underlying contract

[00:11:08] Speaker 05:
was fraudulently procured.

[00:11:11] Speaker 05:
Because at that, during the PowerPoint presentation to the president,

[00:11:20] Speaker 05:
And the AMTH speech was based on the fact that, look, Enron is a solid company, financially viable.

[00:11:28] Speaker 05:
This is a company that we are affiliated with that has founders that will stand behind this deal.

[00:11:33] Speaker 05:
And it's specifically related to the issues of the value of Enron.

[00:11:39] Speaker 05:
In fact, as at that time, your honor, Enron was already actually bankrupt.

[00:11:47] Speaker 04:
What I'm concerned about is the Supreme Court has told us that in certain circumstances this court or the district court should look at the underlying contract between the parties even in the case of arbitration.

[00:12:07] Speaker 04:
On the other hand, the Supreme Court told the unanimous panel of this court that when it held that

[00:12:14] Speaker 04:
Contract interpretation was for the court.

[00:12:19] Speaker 04:
Supreme Court reversed saying no, that was for the arbitrator in the Argentina case.

[00:12:27] Speaker 04:
So I need to understand where we are now in terms of the standard of review.

[00:12:34] Speaker 05:
I think the standard of review should basically be to review the entire transaction as a whole, the contracts as a whole.

[00:12:44] Speaker 05:
My time is up.

[00:12:46] Speaker 05:
I've reserved three minutes for a photo.

[00:12:48] Speaker 05:
I'll be here for further questions.

[00:12:50] Speaker 04:
Thank you.

[00:12:53] Speaker 05:
Thank you.

[00:13:03] Speaker 04:
Good morning.

[00:13:04] Speaker 01:
Good morning.

[00:13:06] Speaker 01:
May it please the Court.

[00:13:08] Speaker 01:
My name is Kenneth Barrett, and I represent Enron Nigeria Power Holdings Limited.

[00:13:15] Speaker 01:
The Court has raised an issue as to what the standard of review is for this Court in terms of the findings of the arbitration panel constituted by the International Commerce Commission.

[00:13:27] Speaker 01:
And it is clear that this panel's standard of review is de novo of the district court's decision.

[00:13:34] Speaker 01:
But the district court and all courts in the federal system are to give great difference to the factual findings of the arbitration panel.

[00:13:43] Speaker 01:
There is no question in this case as to the fairness, as to the procedures, or as to the scope of the arbitration that took place over the six years.

[00:13:55] Speaker 01:
This arbitration panel spent six years' worth of proceedings on over 100 pages in opinions in evaluating some of the very arguments that the appellant is asserting here as a grounds for the invocation of the public policy exception.

[00:14:11] Speaker 04:
But as I understand it,

[00:14:12] Speaker 04:
Council is arguing not that there was anything fraudulent or corrupt as to the panel, the ICC panel or its procedures, but rather if you look at their several decisions, they in effect found that there was this unity of entities, there was this sort of

[00:14:38] Speaker 04:
overarching presence of Enron Corporation in this transaction and we should take that into account.

[00:14:47] Speaker 01:
The court is correct.

[00:14:49] Speaker 01:
The first decision under consideration is the partial award on remedies.

[00:14:57] Speaker 01:
And that's a decision in which the arbitration panel went through the defenses, the claims, and the counterclaims of all the parties, including the defense of fraud, the defense of misrepresentation, the defense of illegality, and the argument by at least one of the respondents that Enron and ENPH were all one entity.

[00:15:17] Speaker 01:
The arbitration panel rejected each of those, and those are the factual underpinnings for the public policy argument.

[00:15:26] Speaker 01:
Then the arbitration panel addressed the issue of damages in what it called the final award on remedies.

[00:15:36] Speaker 01:
E&PH asked the panel to consider lost profits as a measure of damages.

[00:15:42] Speaker 01:
And the arbitration panel rejected that on the grounds that there were several uncertainties.

[00:15:48] Speaker 01:
It acknowledged that Enron Corporation could have been a resource, but it was not a required resource under the terms of the PPA.

[00:15:56] Speaker 01:
And it acknowledged that the bankruptcy had occurred and determined that there were too many uncertainties to award lost profits.

[00:16:04] Speaker 01:
the parties all agreed that lost opportunity was the best measure of damages.

[00:16:09] Speaker 01:
And it went through an analysis and it looked at what could have happened given the circumstances.

[00:16:16] Speaker 01:
And it concluded that the power purchase agreement, which it considered to be a legal agreement, had some value as of the time of nine days after it was signed.

[00:16:25] Speaker 01:
It had some value at that particular point in time and went ahead and avoided damages.

[00:16:31] Speaker 01:
It did engage in some analysis as to the assets of ENPH, but it determined that that did not preclude an award of damages.

[00:16:40] Speaker 01:
And because ENPH was not obligated to build the power plant itself, it was not obligated to provide all the money.

[00:16:50] Speaker 01:
You could seek independent resources to do so.

[00:16:52] Speaker 01:
And therefore, it went ahead and made its award in EMPH's favor, an award that was substantially less than what EMPH had initially asked for in the arbitration.

[00:17:06] Speaker 03:
So.

[00:17:07] Speaker 03:
I understand your point that we owe special or high deference to the actions, to the decision here.

[00:17:16] Speaker 03:
Suppose we look at all of this evidence and conclude that this just can't be right, that it's just wrong.

[00:17:24] Speaker 03:
Can we do that?

[00:17:25] Speaker 03:
Well, if I look at all of this evidence, each one of these items individually,

[00:17:31] Speaker 03:
The PowerPoint, the 1999 letter, the August memorandum of understanding, the additional documents, the evidence of a sham transaction.

[00:17:44] Speaker 03:
As I look at those, I think to myself, okay, well, individually I get it, but in their totality,

[00:17:51] Speaker 03:
You know, I wonder about the legitimacy of this decision.

[00:17:56] Speaker 01:
I understand, Your Honor.

[00:17:57] Speaker 01:
It's clear that Enron Corporation has one of the most toxic names in America's history.

[00:18:03] Speaker 03:
Yeah, I got that.

[00:18:04] Speaker 03:
But I was setting that aside.

[00:18:06] Speaker 01:
Right.

[00:18:06] Speaker 01:
You set that aside and look at the chain of events.

[00:18:09] Speaker 01:
Yeah.

[00:18:10] Speaker 01:
In June 1999, negotiations began for this power purchase agreement that had three phases.

[00:18:16] Speaker 01:
Two phases, one and three.

[00:18:18] Speaker 03:
Let me, before you go through that, and I appreciate the fact that you're going to, this court can upset that decision if we think it's just flat out wrong, correct?

[00:18:29] Speaker 01:
I believe it.

[00:18:30] Speaker 03:
It's not binding on us.

[00:18:31] Speaker 03:
We just owe special deference.

[00:18:33] Speaker 01:
Great.

[00:18:34] Speaker 01:
It's a tremendous amount of deference.

[00:18:35] Speaker 03:
Tremendous.

[00:18:35] Speaker 03:
But that doesn't mean we just say, OK, whatever they did is, we're not bound by it, right?

[00:18:46] Speaker 01:
Right.

[00:18:47] Speaker 01:
The court is not a rubber stamp.

[00:18:48] Speaker 03:
We're not a rubber stamp.

[00:18:49] Speaker 01:
OK.

[00:18:50] Speaker 03:
Now, just explain to me quickly why, when you look at all of these actions together,

[00:18:57] Speaker 03:
If you look at all the actions... Why isn't Nigeria correct about this?

[00:19:04] Speaker 01:
Because the actual agreement that was signed between the parties...

[00:19:08] Speaker 01:
has resulted in the provision of electrical generation capacity in Nigeria.

[00:19:14] Speaker 01:
It is a legitimate agreement.

[00:19:15] Speaker 01:
Phases one and three were renegotiated by the parties, and today in Lagos, this afternoon, there are businesses and schools that are running on electricity generated as a result of this deal.

[00:19:28] Speaker 01:
The Enron Corporation may have engaged in misdeeds, but as to this particular agreement,

[00:19:36] Speaker 01:
It's a legitimate agreement that did not go forward nine days after it was executed because Nigeria decided to long before the Enron bankruptcy occurred in, I think, November of 2001.

[00:19:48] Speaker 01:
So there are some unfortunate acts by some in Enron in 1999 and late 2000, but they are not tied to this particular agreement.

[00:20:06] Speaker 01:
There are three grounds for affirming this decision.

[00:20:09] Speaker 02:
One is- Counsel, let me follow up on Judge Tatum's question.

[00:20:13] Speaker 02:
What's your view about when we can review the factual determinations of the ICC?

[00:20:23] Speaker 02:
You said we're not a rubber stamp.

[00:20:25] Speaker 02:
What are we?

[00:20:27] Speaker 02:
When are we authorized to look at the factual findings of the ICC and say, well,

[00:20:35] Speaker 01:
If it's – I believe one situation is a situation in which the arbitration panel clearly does not apply the applicable law.

[00:20:46] Speaker 01:
This is a situation where the panel used British – or rather Nigerian law, which is premised on the same law that governs the United States in terms of fraud and misrepresentation and breach of contract.

[00:21:00] Speaker 01:
So I suspect that that's one situation.

[00:21:04] Speaker 02:
You're saying if the ICC used the law in the law?

[00:21:07] Speaker 01:
If they were totally familiar about the law.

[00:21:09] Speaker 02:
You're saying they decided to use Japanese law to resolve.

[00:21:11] Speaker 01:
Right, they used Japanese law or it was clear they gave lip service to applying the applicable law, in this case, which was Nigerian law.

[00:21:20] Speaker 01:
Okay.

[00:21:20] Speaker 01:
That was another instance.

[00:21:26] Speaker 01:
It is, frankly, it's difficult to think of a circumstance unless it is clear from the record that the evidence supporting the position of one of the parties that was given credence by the arbitration panel was a lie or blatantly incorrect.

[00:21:45] Speaker 01:
Was what?

[00:21:46] Speaker 01:
Was fabricated.

[00:21:48] Speaker 01:
I think if there's some indication that evidence was clearly fabricated, that may be a circumstance where the court... Well, but suppose the panel decided it wasn't fabricated.

[00:22:04] Speaker 04:
In other words, do you know of any case that bars this court from doing the type of analysis Judge Tatel's

[00:22:15] Speaker 04:
question suggested and reaching its own conclusion about the nature of this agreement and the influences underlying it.

[00:22:30] Speaker 01:
I am unaware of a case that is that explicit, but there is Supreme Court president and president from other circuits that says that the arbitration panel's decisions in factual analysis and application of law to facts does deserve great deference, and it is not the judge or the province of the courts to review.

[00:22:50] Speaker 04:
So I'm trying to understand as well as whether the New York Convention

[00:22:55] Speaker 04:
establishes a different type of regime than the Federal Arbitration Act.

[00:23:06] Speaker 04:
Clearly, I think you agree that the Article 5 defenses heavy burden on the party trying to establish them.

[00:23:16] Speaker 04:
But you haven't argued that we're bound

[00:23:23] Speaker 04:
that we can't look at those factual findings.

[00:23:25] Speaker 04:
I mean, if we were looking at the district court's decision in our trial, and we concluded clearly erroneous that we have an abiding conviction that the district court made a mistake, are those the same type of standards we apply in the New York Convention context?

[00:23:44] Speaker 04:
Or is there some other regime that applies?

[00:23:48] Speaker 04:
Or don't we know?

[00:23:50] Speaker 01:
I have not found any case president addressing that particular question, but I do know that the policy in support of the convention and in support of the Federal Arbitration Act strongly favors affording the great deference to the arbitrator's findings.

[00:24:09] Speaker 02:
Yeah, great deference.

[00:24:10] Speaker 02:
What does that mean?

[00:24:13] Speaker 04:
Unless we have an abiding faith that an error was made.

[00:24:17] Speaker 01:
Yeah, unless there is clear, absolute evidence of an error in terms of the factual... And what's your argument that that didn't occur here in light of the factors Judge Table pointed to?

[00:24:33] Speaker 02:
Why isn't that point in the direction that maybe the ICC panel just is way off base here?

[00:24:40] Speaker 01:
Well, the facts are that the part of the agreement was executed, and after the agreement was suspended, the parties got together and started renegotiating.

[00:24:51] Speaker 01:
And they renegotiated portions one and three.

[00:24:55] Speaker 04:
I don't understand what happened after the fact.

[00:25:00] Speaker 04:
really influences our decision here.

[00:25:02] Speaker 04:
Just because you and I enter into a contract that fails doesn't mean I can't go out and make another contract that succeeds.

[00:25:10] Speaker 04:
But I don't know that it has anything to say about our contract.

[00:25:15] Speaker 01:
Well, in this situation, the fact that the parties did some more negotiating after the suspension of the agreement and reached an agreement and executed an agreement and the heavy electricity is provident of the fact that the original agreement was not fraudulent.

[00:25:32] Speaker 04:
I mean, I can give you hypotheticals where that wouldn't work.

[00:25:38] Speaker 04:
You know, you and I have an agreement, and I say that's fraudulent, and you say, okay, I'll change my view.

[00:25:44] Speaker 01:
Right.

[00:25:45] Speaker 01:
I think there's one finding of the arbitration panel that hopefully the court will give great consideration to.

[00:25:52] Speaker 01:
And it is that the agreement would have gone forward but for the issue between the parties as to price.

[00:25:59] Speaker 01:
If that's the case, then the fraud argument, which was generated after the arbitration proceedings were initiated, doesn't seem as valid at this stage.

[00:26:15] Speaker 01:
And you can see my time is up.

[00:26:17] Speaker 04:
All right.

[00:26:17] Speaker 04:
Thank you.

[00:26:18] Speaker 01:
Thank you.

[00:26:27] Speaker 05:
I just want to make one point of clarification with respect to the issue of renegotiation.

[00:26:39] Speaker 05:
Now, when the contract initially was stayed nine days after its execution, Nigeria did in good faith actually try to renegotiate different phases of the project.

[00:26:52] Speaker 05:
But that negotiation spanned, as of that time,

[00:26:56] Speaker 05:
Aaron's corporations bankruptcy had not yet come through.

[00:27:02] Speaker 05:
So it was still under the assumption that the facts that it was given, the representations, were real, were true.

[00:27:08] Speaker 05:
It had no basis to doubt that.

[00:27:11] Speaker 05:
Phase one and phase two, because Nigeria did negotiate in good faith, yes, it did go through.

[00:27:15] Speaker 05:
But during the course of the negotiations, the bankruptcy came through.

[00:27:19] Speaker 05:
It realized that Aaron Corporation was no longer going to be

[00:27:23] Speaker 05:
going to be there and that the financials that had been presented were actually fraudulent.

[00:27:32] Speaker 05:
Thank you, Your Honor.

[00:27:33] Speaker 04:
Thank you.

[00:27:33] Speaker 04:
We'll take the case under advisement.