[00:00:00] Speaker 03: Case number 15, Judge 7077, New Hill Limited versus government of the lease appellate, Mr. Basta-Brown. [00:01:18] Speaker 03: Good morning. [00:01:19] Speaker 03: I thought we'd just wait until the room clears. [00:01:52] Speaker 03: Good morning. [00:01:54] Speaker 01: Good morning, Your Honor. [00:01:55] Speaker 01: It's Juan Basumbrillo for the government of Belize. [00:01:59] Speaker 01: In this case, it's undisputed that Nucco is a Belizean company. [00:02:04] Speaker 01: And the reason why they came to the US to confirm the award here is because they don't want to pay the taxes they owe to the government of Belize. [00:02:13] Speaker 01: Here in the US, they can get paid on the award, and the government of Belize cannot deduct the taxes because of the revenue rule. [00:02:21] Speaker 01: The decision of the district court is in conflict with the decision of the Supreme Court of Belize, which held instead that the government of Belize was obligated to deduct those taxes. [00:02:31] Speaker 03: Could I just be clear? [00:02:34] Speaker 03: They're here, as I understand it. [00:02:36] Speaker 03: I don't know all the underlying motivations they may have had. [00:02:40] Speaker 03: But they're here because of an arbitration clause where they're seeking to enforce the award. [00:02:50] Speaker 03: Now, whether or not the government of Belize can, in some manner, collect taxes, it seems to me is a different question. [00:03:03] Speaker 01: It's not, only if I can explain why. [00:03:05] Speaker 03: I understand the beauty of what you're trying to say. [00:03:10] Speaker 03: But I don't understand why the government would be forever barred. [00:03:15] Speaker 03: And we don't have to get into this, but I just want you to know that that gave me some pause in reading the briefs. [00:03:21] Speaker 01: Well, as a practical matter, if the money is paid in the United States, it's never going to reach beliefs. [00:03:30] Speaker 01: And therefore, the government's never going to be able to collect this portion of these funds. [00:03:34] Speaker 03: So that's just a practical art. [00:03:36] Speaker 01: And the government is obligated, according to the Belief Supreme Court, to deduct those taxes. [00:03:41] Speaker 01: So the government cannot pay in the United States [00:03:45] Speaker 01: without violating the order of the Supreme Court of Belize. [00:03:49] Speaker 01: It cannot pay in Belize without violating the order of the district court. [00:03:54] Speaker 01: The government wants to pay. [00:03:55] Speaker 01: This is not a case where the government's saying we're not going to pay the award. [00:03:59] Speaker 01: But we've been told by our Supreme Court that we've got to deduct the taxes owed. [00:04:04] Speaker 01: So what do we do in that situation? [00:04:06] Speaker 01: I think there are three ways out. [00:04:08] Speaker 01: One of them is the New York Convention, the public policy defense. [00:04:13] Speaker 01: that this report should have denied confirmation based on the public policy defense. [00:04:17] Speaker 01: What's the public policy? [00:04:19] Speaker 01: It's no secret. [00:04:21] Speaker 01: We hear it all the time. [00:04:21] Speaker 01: There are two certain things in the US, debt and taxes. [00:04:24] Speaker 01: We clearly have a policy in the US government that taxpayers should pay their taxes. [00:04:30] Speaker 01: by coming to the United States were enabling NUCCO to avoid their tax obligation. [00:04:36] Speaker 01: Therefore, the New York Convention in the Public Policy Defense Article 5 to B provides a mechanism for a court finding this conflicting situation to deny confirmation, and that's what should have been done here. [00:04:55] Speaker 01: We felt getting to the merits. [00:04:58] Speaker 01: There's another way out, which is forum non-convenience. [00:05:02] Speaker 01: The difficulty that we have in respect to FNC is the TMR decision, a prior decision of this court. [00:05:09] Speaker 01: The district judge held that he was not going to get to the balancing test under FNC because under TMR energy, there is no adequate alternative form. [00:05:22] Speaker 01: Why? [00:05:23] Speaker 01: Because TMR energy held that if you are suing to collect on money that the defendant or respondent may have in the US, you can't do that in a foreign court. [00:05:33] Speaker 01: And so there's no alternative form. [00:05:37] Speaker 01: We submit that that decision, which was a 2007 decision, is no longer good law after the Sino-Kem decision of the Supreme Court from two years later. [00:05:49] Speaker 01: And let me explain why. [00:05:50] Speaker 01: If you read that decision, the reasoning is quite simple. [00:05:54] Speaker 01: In that case, you have two foreign entities. [00:05:57] Speaker 01: One's the plaintiff's suit that defended for damages. [00:06:00] Speaker 01: in the United States, the Supreme Court said two things which are very important. [00:06:06] Speaker 01: Number one, the Supreme Court said that FNC applies only where the alternative forum is abroad. [00:06:17] Speaker 01: All other application of FNC in the United States has been displaced. [00:06:21] Speaker 01: That's the only application. [00:06:23] Speaker 01: Now, TMR can't be reconciled with that because TMR says if you sue for money in the United States, [00:06:34] Speaker 01: There's never an adequate alternative form somewhere else, because a foreign court cannot attach assets in the US. [00:06:41] Speaker 01: There's really no way to reconcile these two decisions. [00:06:44] Speaker 01: And the Supreme Court, Justice Ginsburg, also said in the Sinochem that that case presented a quote, unquote, a textbook example for application of FNC. [00:07:00] Speaker 01: So we submit that TMR energy cannot possibly be good law after Sinochem. [00:07:07] Speaker 01: Instead, this case is just like the figurative decision of the Second Circuit. [00:07:13] Speaker 01: I know that a prior panel decided not to take that into account, but that prior panel in BSDL didn't discuss these cases. [00:07:22] Speaker 01: They just ignored it. [00:07:25] Speaker 01: In the Second Circuit decision in Figueredo, you have the government of Peru, which was subject to a limitation in the law as to how it should pay an arbitration award rendered in Peru. [00:07:38] Speaker 01: There was a limit. [00:07:39] Speaker 01: Like the government of Belize, Peru was paying the award, but subject to a Peruvian law limit. [00:07:45] Speaker 01: The Second Circuit said Peruvian courts are inadequate for them because they can get paid something there. [00:07:52] Speaker 01: They're being paid. [00:07:54] Speaker 01: It's just being done under a legal scheme, a Peruvian legal scheme, that the plaintiff agreed to. [00:08:01] Speaker 01: Here, Nuco, a Belizean company, [00:08:05] Speaker 01: agreed to the Belizean legal scheme. [00:08:08] Speaker 01: And so under Figueredo, really, this is a case that should have been dismissed on FNC grounds. [00:08:17] Speaker 01: Now, let me mention in this regard, as the court is aware, that the Supreme Court has expressed some interest, at least, in that conflict between the Second Circuit and TMR decision. [00:08:28] Speaker 01: I believe there's no conflict anymore, because if you rule that Sinocum has [00:08:35] Speaker 01: render TMR energy no longer good law. [00:08:42] Speaker 01: But I should note that in Figaro, the United States government did submit a statement of interest. [00:08:49] Speaker 01: And they sided with Peru in that case. [00:08:52] Speaker 01: So it is the position of the US government that FNC does apply under the New York Convention. [00:08:58] Speaker 01: And let me tell you why it applies. [00:09:01] Speaker 01: Because Article 3 of the New York Convention says so. [00:09:04] Speaker 01: It says confirmation actions are subject to local procedural laws. [00:09:10] Speaker 01: The last point I want to make relates to international comedy. [00:09:14] Speaker 01: And to apply international comedy, there must be an actual conflict. [00:09:18] Speaker 01: And as I mentioned here, there is an actual conflict because the Belizean Supreme Court saying you must deduct taxes. [00:09:27] Speaker 01: The district court here says you got to pay regardless of the offset. [00:09:32] Speaker 01: Now, international comedy is a bedrock principle of law applied in international relations. [00:09:41] Speaker 01: And that's why we're before you. [00:09:43] Speaker 02: Isn't the whole regime of arbitration, which is heavily favored in the United States under the Federal Arbitration Act, to avoid just this situation so you don't have to go back [00:09:56] Speaker 02: to the home country and get home cooking against you? [00:09:59] Speaker 02: I mean, it serves much the function that diversity jurisdiction does here, provides a neutral forum to hear these disputes. [00:10:08] Speaker 01: That is partially right, because the New York Convention in Article 5 2B [00:10:15] Speaker 01: requires courts to take into consideration public policy considerations. [00:10:21] Speaker 01: There is a public policy defense in the New York Convention, so we have to engage in this analysis. [00:10:26] Speaker 01: If there wasn't one, I think that would be a good point, but there is. [00:10:30] Speaker 02: So that's the only escape that you have is the public policy defense. [00:10:35] Speaker 02: I thought the public policy defense applied to courts of primary jurisdiction. [00:10:39] Speaker 01: No. [00:10:40] Speaker 01: It applies to the court in which you're seeking to confirm the award. [00:10:45] Speaker 01: So it would apply here. [00:10:48] Speaker 01: The question. [00:10:48] Speaker 02: Yes, it should probably call to the United States. [00:10:50] Speaker 01: All right. [00:10:52] Speaker 01: I'm going to reserve the rest of the time for rebuttal. [00:10:54] Speaker 01: All right. [00:10:54] Speaker 01: Good. [00:10:55] Speaker 01: Thank you. [00:11:06] Speaker 03: Good morning. [00:11:07] Speaker 00: May it please the court, Ryan Bull on behalf of NUCCO Limited. [00:11:10] Speaker 00: I want to start with the point of Belize that NUCCO is here because it's seeking to evade Belizean taxes, which is not true. [00:11:20] Speaker 00: But more importantly, under the decisions that this court entered in TMR, our motive as a claimant is not material. [00:11:27] Speaker 00: And that's found at TMR. [00:11:36] Speaker 00: As Judge Rogers pointed out, we're here in the United States because Belize agreed to arbitrate a dispute in the United States. [00:11:47] Speaker 00: Belize agreed that that arbitration would be conducted under the procedural laws of the United States. [00:11:51] Speaker 00: Belize participated in that arbitration in the United States. [00:11:54] Speaker 00: It presented witnesses in the United States. [00:11:56] Speaker 00: It was free to make any arguments that it wanted to. [00:11:58] Speaker 00: in that arbitration in the United States, including an argument that any award must be entered in the US in Belizean dollars as opposed to US dollars. [00:12:07] Speaker 00: It did not present any of those arguments. [00:12:09] Speaker 00: Rather, Belize, in fact, paid advanced costs to the arbitration body of $168,000 US dollars, which just confirms that it's post hoc arguments that it can't pay a US dollar award consistent with Belizean law. [00:12:26] Speaker 00: or excuses to avoid an obligation that it's been seeking to avoid for the last few years. [00:12:36] Speaker 00: I would submit that the revenue rule in part exists to protect Belize from challenges like what would come from us if we were presented with the need to address this tax ruling in this court. [00:12:49] Speaker 00: It protects Belize from the types of attacks that would necessarily come forward. [00:12:55] Speaker 00: And for that reason, just as Belize can't be attacked for its revenue rulings in its own borders, so it can't collect on its revenue rulings in these borders. [00:13:08] Speaker 00: In terms of the TMR decision, counsel has submitted that Sinochem is somehow irreconcilable with the TMR decision, and I don't agree. [00:13:22] Speaker 00: Sinochem, the principle holding of Sinochem, of course, is that the court can address formed unconvenience in advance of addressing jurisdictional issues. [00:13:32] Speaker 00: And that's the core of the analysis. [00:13:35] Speaker 00: Yes, the court says that in dictated, noting past holdings, American dredging, that in the United States, forum nonconvenience applies when one is talking about dismissal in favor of a foreign forum. [00:13:48] Speaker 00: Now, section 1404 of the code applies when we're talking about transfer or an inconvenient forum within the United States. [00:13:59] Speaker 00: In terms of the [00:14:02] Speaker 00: The notion that this is a paradigm for formed unconvinced dismissal, yes, where the claim is for money damages. [00:14:12] Speaker 00: And as the court stated at page 435 and 436 of its opinion, the gravamen of the complaint is misrepresentations to a Chinese admiralty court in the course of securing arrest of a vessel in China. [00:14:27] Speaker 00: That is an issue best left for Chinese courts. [00:14:31] Speaker 00: But contrary to what Belize represented in its briefs, Sinachem doesn't involve a case in which the parties are seeking attachment of assets in the United States, in which only a US court can act. [00:14:48] Speaker 00: Turning briefly to the issue of form non-convenience, and I'm going to talk a little bit more broadly and talk a little bit about Article III of the New York Convention, because what I think [00:15:02] Speaker 00: Both Belis here and the Mondere case in the Second Circuit, which actually applied to New York Convention. [00:15:08] Speaker 00: Figueredo dealt with the Panama Convention, so it's a different language. [00:15:13] Speaker 00: What the parties there are disregarding is key language at the end of Article III, which says that, yes, rules of procedure of a court asked to enforce an arbitral award apply, but they do so, quote, under the conditions laid down below. [00:15:29] Speaker 00: And that language, parallel language, is not present in the Panama Convention. [00:15:33] Speaker 00: But that language must mean that you look to the conditions laid down below. [00:15:37] Speaker 00: And a rule of procedure of a domestic form can only apply to the extent that it's consistent with the conditions laid down below. [00:15:47] Speaker 00: And you can't have application of form non-convenience or comity in favor of a non-primary jurisdiction. [00:15:55] Speaker 00: as Belize is asking for here, consistent with those conditions that are set forth in Article 5.1e and Article 6 of the Convention. [00:16:03] Speaker 00: What Article 5.1e says is that when you are asked, court, of any signatory to the New York Convention, to defer or pay attention to the ruling of another court, [00:16:15] Speaker 00: you must satisfy two things. [00:16:16] Speaker 00: It has to be a court of one of two things. [00:16:20] Speaker 00: It has to be a court where the arbitration order was made, or it has to be a court of the jurisdiction under whose laws the arbitration was made. [00:16:28] Speaker 00: In both instances here, that's the United States. [00:16:31] Speaker 00: And that's what this court recognized in BSDL applying Article 6 of the convention, which deals specifically with staying US litigation in favor of such a form. [00:16:43] Speaker 00: And the result that Belize would create here would allow parties in this circuit to obtain dismissal of a case in favor of a secondary jurisdiction like Belize, when under BSDL 1, [00:17:01] Speaker 00: parties wouldn't be permitted to stay US litigation pending resolution of that secondary jurisdiction proceeding. [00:17:07] Speaker 00: And that just doesn't make a lot of sense. [00:17:13] Speaker 00: A couple of final points, and then if there are any questions. [00:17:20] Speaker 00: I did want to note that the court alluded to it in some of its questionings. [00:17:25] Speaker 00: The doctrine of comity is, in the first instance, [00:17:29] Speaker 00: something that the Supreme Court explained in Hilton at page 163, must be guided first and foremost by the treaties and statutes of this country. [00:17:39] Speaker 00: You only turn to the doctrine of comity after you have exhausted the resources that are available in the treaties and statutes. [00:17:46] Speaker 00: And here, as I've discussed, the New York Convention provides the answers to the question that Elias seeks. [00:17:56] Speaker 00: Finally, I did want to stress again the point that we made in our submission with respect to Belize's motion to state the proceedings pending the Supreme Court determination in the BSDL case. [00:18:10] Speaker 00: Irrespective of TMR decision, which is dispositive of the former unconvenience issue in this case, and irrespective of [00:18:19] Speaker 00: the Article III under the New York Convention issue, in which we believe foreign nonconvenients and comity aren't properly raised as defenses in a New York Convention case. [00:18:31] Speaker 00: Here we have a situation where in no event would Belize be entitled to claim that the US is an inconvenient forum after having agreed to arbitrate here, participated in arbitration here, and agreed that in the underlying contract, that in implementation of any award, [00:18:50] Speaker 00: may be had in any jurisdiction where Belize or its assets are located. [00:18:54] Speaker 00: And we would submit that on that basis, even if the Supreme Court were to reach a different result than TMR, and even if the Supreme Court were to say that Article III permits reliance on formal inconvenience or comity, this case would still mandate affirmance of the decision below. [00:19:15] Speaker 03: Thank you. [00:19:24] Speaker 01: The distinction between primary and secondary jurisdiction has nothing to do with Article 3 or Article 5. [00:19:30] Speaker 01: It relates only to Article 6, which deals with staying of an action. [00:19:35] Speaker 01: There's a reason for that. [00:19:37] Speaker 01: A U.S. [00:19:37] Speaker 01: court should stay in action if a court of primary jurisdiction can vacate the award. [00:19:43] Speaker 01: But if it's not primary jurisdiction, the foreign forum, then you don't need to state it because you are equals. [00:19:48] Speaker 01: But that has nothing to do with Article III or Article V, which deal with confirmation of the award. [00:19:54] Speaker 01: And I would just refer that to Article III, which is clear that it says confirmation is dependent on the rules of procedure of the territory where the award is being relied upon. [00:20:05] Speaker 01: The award is being relied upon. [00:20:07] Speaker 01: Here FNC applies is one of our rules of procedure. [00:20:11] Speaker 01: with respect to Sinochem, this is not dictat. [00:20:15] Speaker 01: I would urge the court just to read that decision. [00:20:18] Speaker 01: The core of that decision is that FNC applies only where a foreign forum is abroad. [00:20:24] Speaker 01: That plaintiff sought damages here, the Supreme Court said, because this whole dispute involves China and Malaysia. [00:20:31] Speaker 01: Like this whole dispute involves Belize. [00:20:34] Speaker 01: This is a textbook example for FNC application, and so is this case. [00:20:39] Speaker 03: Alright, thank you.