[00:00:00] Speaker 00: Case number 23-7174, Ali Enterprise is limited at now, first Russian Federation at valence. [00:00:08] Speaker 00: Mr. Riesenberg for the at valence, Mr. Sheppard for the at valence. [00:00:12] Speaker 03: Good morning, Counselor. [00:00:14] Speaker 02: Mr. Riesenberg, please proceed when you're ready. [00:00:17] Speaker 02: Good morning, Your Honors, and may it please the Court, Russia has reserved three minutes for rebuttal. [00:00:24] Speaker 02: Your Honors, the District Court here made three errors of law. [00:00:29] Speaker 02: First, the District Court found that the litigants here supposedly agreed to exclude and forfeit judicial review of questions that arise under the Foreign Sovereign Immunities Act at Section 1605A6, including whether Russia made an arbitration agreement with or for the benefit of petitioners under the Energy Charter Treaty, or ECT. [00:00:57] Speaker 02: This was wrong. [00:00:58] Speaker 02: No exclusive delegation agreement can be shown here under the clear and unmistakable standard, or indeed under any standard, looking at the text and the context and the international law and international practice regarding the competence-competence doctrine. [00:01:14] Speaker 02: Most obviously, Holly Enterprise and the other appellees in this case never made this exclusive delegation argument [00:01:22] Speaker 02: in any of the other six courts where this case has been heard across Europe, Asia, and North America for 10 years. [00:01:32] Speaker 02: And in any event, the jurisdictional elements under the Foreign Sovereign Immunities Act cannot be delegated exclusively to external arbitrators. [00:01:41] Speaker 02: The FSIA exceptions implicate not only the subject matter jurisdiction of a court of the United States, but also the foreign relations of the United States. [00:01:51] Speaker 02: and potentially the reciprocal treatment of the United States in foreign jurisdictions. [00:01:57] Speaker 02: So naturally, only the courts of the United States can decide those questions and not external arbitrators. [00:02:04] Speaker 03: What about the Dutch court? [00:02:06] Speaker 03: So if the principle that the district court relied on were correct, then would that have also been true of judicial review in the Dutch system? [00:02:16] Speaker 02: If the principle that the district court in this case relied upon was correct. [00:02:21] Speaker 03: In other words, if the deciding criteria here is that the tribunal, the arbitral tribunal, determined whether it had jurisdiction and then that's dispositive for purposes of the US court's inquiry into it, would that also apply to the Dutch court review that happened in the aftermath of the tribunal determination? [00:02:41] Speaker 02: Chief Judge Srinivasan, you're asking me if the lower court's premise was correct, we would say that I can't accept that premise because the government of the United States has disagreed with that premise in the amicus brief filed in Nextera versus the Kingdom of Spain. [00:03:01] Speaker 03: I guess here's one way to ask it. [00:03:02] Speaker 02: Yes, Judge. [00:03:03] Speaker 03: The arguments have been made here by the other side. [00:03:06] Speaker 03: And the district judge accepted the argument that you shouldn't look at this issue anew because the tribunal already resolved it. [00:03:14] Speaker 03: All the parties agreed that the tribunal was going to resolve this. [00:03:16] Speaker 03: And so there's no court second guessing of that. [00:03:20] Speaker 03: I guess my question is, if that were true, would that also have been true in an argument that could have been made to the Dutch courts? [00:03:29] Speaker 02: So Judge, what we would say is, I want to address all these different possibilities and apologies if I'm struggling to decide what's an assumption and what's not an assumption here. [00:03:42] Speaker 03: So maybe I'm just asking, maybe I'm not asking the question correctly, but you started with the point that the argument that prevailed below and that was asserted by the other side has not been accepted in any of the other countries in which the word is sought to be enforced. [00:03:55] Speaker 03: I guess my only question is, [00:03:57] Speaker 03: Could you also, could you make that same point about review in the Dutch system? [00:04:02] Speaker 03: That if that argument were true and it would have been accepted by any of the other countries, it also would have been accepted within the Dutch system itself because you could equally say, look, everybody agreed that this was supposed to be resolved by the tribunal. [00:04:14] Speaker 03: So why are you the US court looking at it? [00:04:16] Speaker 03: Which is the same question as why are you the court in some other country looking at it? [00:04:19] Speaker 03: You could also have made the same argument and it also would have equally been a prevailing one in the Dutch system, were it in fact a meritorious argument. [00:04:26] Speaker 02: Well, I'll go through the foreign courts, and we can talk about what each of them would have said with respect to the exclusive delegation concept and also the issue preclusion concept, which is. [00:04:38] Speaker 03: Yeah, I'm not talking about issue preclusion. [00:04:39] Speaker 03: I'm just talking about the ground that was actually admitted to the decision below. [00:04:45] Speaker 02: The decision below rested on the idea that the parties here clearly and unmistakably delegated arbitrability to the arbitrators, including those arbitrability concepts that have been codified as jurisdictional elements under the Foreign Sovereign Immunities Act. [00:05:03] Speaker 02: That argument was never made and would have lost. [00:05:07] Speaker 02: That argument would have been rejected in the Netherlands and Belgium and France and Germany and India and England and Canada. [00:05:16] Speaker 02: All of the other jurisdictions that have heard this case would have looked at this clause [00:05:20] Speaker 02: and they would have said, this is a competence, competence clause. [00:05:24] Speaker 03: So I guess what I'm asking is, I know that you disagree with whether the argument's a successful one, but I'm just asking you to accept the premise. [00:05:32] Speaker 03: Let's just assume that the argument is a successful one. [00:05:35] Speaker 03: Would it be equally successful in the Netherlands too? [00:05:40] Speaker 03: In other words, why did the Dutch, I mean, you can look at this as a friendly question. [00:05:44] Speaker 03: Why would the Dutch courts have even looked at [00:05:46] Speaker 03: the question in the way that they did, if it were true that the parties had had given this to the arbitrator to determine, wouldn't it have been equally preclusive in the Dutch system, too? [00:05:58] Speaker 03: It would have. [00:06:00] Speaker 03: Well, it would have. [00:06:02] Speaker 03: Was that argument made in the Dutch? [00:06:03] Speaker 03: You said it wasn't made in any of the other countries. [00:06:06] Speaker 03: That's right, Chief Judge. [00:06:07] Speaker 03: Was it made on judicial review in the Dutch system? [00:06:10] Speaker 02: This argument wasn't made. [00:06:12] Speaker 02: And I honestly, I don't know the answer, Chief Judge, if it could have been made. [00:06:18] Speaker 02: Because the clause in the Uncetrol rules is not unfamiliar in the Netherlands. [00:06:23] Speaker 02: It's also found in Dutch statutory law. [00:06:26] Speaker 02: It doesn't add anything to Dutch statutory law. [00:06:29] Speaker 02: And it also doesn't add anything [00:06:31] Speaker 02: to any other statutory law where the UNSATRAL rules are accompanied by the enactment of the UNSATRAL model law, like Russia. [00:06:41] Speaker 02: Adopting the UNSATRAL clause, the competence-competence clause here, wasn't intended to change anything that you don't normally get as a statutory background presumption in Russia or Cyprus or the Netherlands. [00:06:54] Speaker 02: Arbitrators decide their competence first. [00:06:57] Speaker 02: Courts should not interfere with the analysis of competence during the arbitration, but all of those same jurisdictions also contemplate post-arbitration judicial review of the same question. [00:07:12] Speaker 02: It is fundamentally dissimilar, even though, Judge Rao? [00:07:17] Speaker 00: I guess I'm not sure why you focus so much on competence. [00:07:21] Speaker 00: Competence, which is kind of an international law, international arbitration concept, and instead not focused [00:07:28] Speaker 00: on the Foreign Sovereign Immunities Act and the role of the district court to decide jurisdictional facts. [00:07:36] Speaker 00: So it seems these other principles are of course out there, but we have a specific statute in the United States to determine the scope of sovereign immunity and why isn't that the focus? [00:07:48] Speaker 02: Judge Rao, we would be delighted to prevail on either of these two grounds, Judge Rao. [00:07:56] Speaker 02: There are going to be more arbitrability arguments in this case. [00:08:01] Speaker 02: After the jurisdictional questions are decided, there still will be more questions of arbitrability arising under Article 5.1c of the New York Convention. [00:08:10] Speaker 02: And as explained in Chevron versus Ecuador, [00:08:13] Speaker 02: It is only at that point on the arbitrability phase of the case that an exclusive delegation agreement would matter, would bite. [00:08:22] Speaker 02: And if we win on jurisdiction, then it won't matter, Judge Rao. [00:08:27] Speaker 02: And so we do want to focus today on the fact that two of our arbitrability arguments overlap with FSIA arguments. [00:08:36] Speaker 02: But nonetheless, the conclusion by the district court that this was an exclusive delegation agreement, that nonetheless is going to have consequences down the road in this case when we begin to litigate issues of whether there was any investment under Article 5.1c of the New York Convention. [00:08:54] Speaker 02: having an exclusive delegation agreement in place as part of the law of the case would be wrong, and it would undermine the long-term way in which this case is going to be litigated. [00:09:08] Speaker 02: So there are different combinations of how these different... That explains why you're focused on that question. [00:09:16] Speaker 02: But not exclusively. [00:09:17] Speaker 02: Jurisdictional questions can't be delegated. [00:09:20] Speaker 03: And it's on this on this question of delegation. [00:09:24] Speaker 03: So suppose the parties in fashioning their agreement to go to arbitration. [00:09:33] Speaker 03: forecast all of what's happened, and the competence-competence notion were front and center. [00:09:38] Speaker 03: And suppose they just said, we understand that this might be construed as a competence-competence situation such that a court could actually second-guess what the tribunal did, but we mean for it to be more robust than that. [00:09:48] Speaker 03: We actually mean for this to be reclusive. [00:09:51] Speaker 03: I take it the parties could do that, and if they did, that would be binding courts. [00:09:56] Speaker 02: Many courts would respect that type of agreement. [00:09:59] Speaker 02: The parties have not actually discussed whether the Dutch courts would ever have honored such agreement. [00:10:05] Speaker 02: But obviously, under First Options versus Kaplan, at least in the non-jurisdictional context, if we weren't talking about sovereign immunity, obviously, the United States recognizes something called an agreement to arbitrate arbitrability, brackets, exclusively. [00:10:23] Speaker 02: The ideal example of this type of clause is found in the rent-a-center case. [00:10:29] Speaker 02: That's a United States Supreme Court case, which this court is very familiar with. [00:10:33] Speaker 02: That court, the Rent-a-Center Court, reviewed an arbitration clause which said that the arbitrators will decide these questions exclusively and not any national courts, state or federal or local. [00:10:48] Speaker 02: That was a very clear clause. [00:10:51] Speaker 02: Now, this text that we're looking at today doesn't include the word exclusively. [00:10:58] Speaker 02: It doesn't include any synonym of the word exclusively. [00:11:00] Speaker 03: Suppose that had happened. [00:11:01] Speaker 03: Suppose you had an agreement where all the i's are dotted and the t's are crossed and actually, for whatever reason, both parties actually agree that they want that to happen and they codify it in that way. [00:11:13] Speaker 03: What implications would that have in an FSIA jurisdictional inquiry here? [00:11:18] Speaker 02: The United States government would answer this question as follows, Chief Judge Srinivasan. [00:11:23] Speaker 02: These questions still cannot be delegated to arbitrators. [00:11:26] Speaker 02: This was stated in the amicus brief filed in Nextera versus the Kingdom of Spain, which we submitted with our first 28J letter. [00:11:35] Speaker 02: The practice of this court has not explicitly confirmed that point, but it has certainly borne it out in Chevron versus Ecuador and in Stilex versus Moldova and in Nextera versus the Kingdom of Spain. [00:11:49] Speaker 02: This court has consistently heard cases where no parties argued whether the agreement was an exclusive delegation agreement or not. [00:11:57] Speaker 02: In those cases, it was generally accepted by everyone participating in those cases that these were agreements to arbitrate arbitrability. [00:12:05] Speaker 02: And this court never once in any of those three cases relied on the exclusive delegation agreement as part of the sovereign immunity analysis. [00:12:15] Speaker 02: That confirms the point that the American government is making explicit [00:12:19] Speaker 02: in their amicus brief. [00:12:20] Speaker 02: So whether we look at the FSIA aspect of these of this question, or we look at the unsutral aspect of this question, it is evident that the lower court erred by failing to decide these questions independently and de novo. [00:12:37] Speaker 00: Mr. Rosen, assume for a moment that that I agree with you that the district court did have a responsibility to determine [00:12:44] Speaker 00: those questions de novo. [00:12:46] Speaker 00: What do we make about issue preclusion from the Dutch? [00:12:51] Speaker 00: The Dutch decision, right? [00:12:52] Speaker 00: How do we think about the principles of comedy and reciprocity that apply to foreign decisions? [00:12:58] Speaker 02: Judge Rao, I want to start by quoting the second circuit. [00:13:00] Speaker 00: So I guess maybe my question is, even if the district court has a de novo obligation, how should the district court then think about the issue preclusion? [00:13:09] Speaker 02: Judge Rao, your brothers and sisters on the Second Circuit said, quote, whether a party has consented to arbitrate is an issue to be decided by the court in which enforcement of an award is sought. [00:13:21] Speaker 02: And that means the courts of the United States. [00:13:24] Speaker 02: And on the basis of that principle, [00:13:26] Speaker 02: The Second Circuit declined to give issue preclusive effect to the courts in Egypt, and in the VRG case, which has a reported decision and an unreported decision, Judge Calabresi and Judge Cabranes both declined to give preclusive effect to the courts of Brazil in cases that reject annulment. [00:13:51] Speaker 02: Now here, we have a situation where the annulment litigation is ongoing. [00:13:56] Speaker 02: The Dutch courts have not yet rejected annulment on all grounds. [00:14:01] Speaker 02: We still have a case pending before the Dutch Supreme Court right now. [00:14:05] Speaker 02: And the Dutch Supreme Court has previously reversed decisions of the intermediate Dutch appellate courts. [00:14:12] Speaker 03: Do you know if the United States government taken a position on whether issue of occlusion [00:14:17] Speaker 03: would apply in this kind of context, you know, we have not. [00:14:20] Speaker 02: We have not. [00:14:21] Speaker 02: The issue was not raised in. [00:14:25] Speaker 02: Well, the issue was not raised in the amicus brief by the by the United States in next era versus the Kingdom of Spain. [00:14:33] Speaker 02: But the decision in next era versus the Kingdom of Spain is full of discussion of what the EU courts would hold, what the Swiss court had held and what the arbitrators had decided. [00:14:45] Speaker 02: And the panel [00:14:45] Speaker 02: in Nextera versus the Kingdom of Spain never suggested that there should be any deference to the arbitrators or to the EU Court of Justice or to the Supreme Court of Switzerland with respect to the subject matter jurisdiction of a United States court. [00:15:01] Speaker 02: Now, we have to ask ourselves, why does this situation exist? [00:15:06] Speaker 02: Why did the Second Circuit hold as it did that each court must analyze these questions independently and de novo? [00:15:15] Speaker 02: Uh, and the answer, uh, well, first of all, in the sovereign immunity context is because of the implications for the United States. [00:15:23] Speaker 02: It is not only the U S executive branch that has stated that courts need to decide these questions without deference to arbitrators. [00:15:31] Speaker 02: Um, the logic of which would also say United States courts should not defer to foreign courts. [00:15:36] Speaker 00: Those are two separate things. [00:15:39] Speaker 00: Well, we have, I mean, since the time of the founding, I mean, we have cases [00:15:44] Speaker 00: recognizing principles of comedy between US courts and foreign courts. [00:15:49] Speaker 02: That's entirely correct, Judge Rao. [00:15:51] Speaker 02: The Foreign Sovereign Immunities Act, however, contains an exception to foreign sovereign immunity for arbitration awards. [00:15:59] Speaker 02: but no such exception for the enforcement of foreign court judgments. [00:16:04] Speaker 02: I would say that that is a sign that the United States Congress does not necessarily believe that foreign courts are so responsible and trustworthy that the foreign relations of the United States should be delegated to foreign courts either. [00:16:22] Speaker 04: But I don't see an argument in your briefs that the elements of issue preclusion aren't met here. [00:16:29] Speaker 02: Some of the elements of issue preclusion are met here, but one of the most important elements of issue preclusion is whether the court that has issued the judgment, the preclusive effect of which we are debating, [00:16:49] Speaker 02: itself would consider itself to be preclusive. [00:16:55] Speaker 02: I'm obviously stating that factor incorrectly, but they concede that the Dutch law on this question is important. [00:17:04] Speaker 02: And the Dutch law on this question is as follows. [00:17:09] Speaker 02: Decisions denying annulment by a Dutch court are not intended to have preclusive effect. [00:17:16] Speaker 02: Because the Dutch courts follow the majority rule around the world that only decisions that grant annulment at the seat of arbitration have potentially preclusive effect. [00:17:30] Speaker 02: That's confirmed in the text of Article 5.1e of the New York Convention. [00:17:35] Speaker 02: The New York Convention expresses this single instance where a foreign court judgment is given preclusive effect. [00:17:42] Speaker 02: and implicitly excludes all the other potential ways of approaching issue preclusive effect. [00:17:49] Speaker 03: It sounds like you're, I'm sorry. [00:17:51] Speaker 03: It sounds like you're, I mean, no one's decided issue preclusion here yet. [00:17:57] Speaker 03: And so we're kind of operating a little bit of vacuum, but it sounds like one possibility is issue preclusion actually can govern. [00:18:05] Speaker 03: when you're looking at giving enforcement to an arbitration assessment abroad as a general matter, but not when one of the parties, when the party who would be affected by it as a foreign sovereign, because then the Foreign Sovereign Immunities Act kicks in. [00:18:21] Speaker 03: So even if it's your preclusion otherwise governs, it wouldn't govern in this context. [00:18:25] Speaker 03: Is that part of your submission? [00:18:27] Speaker 02: Chief Judge Srinivasan, we would say that the immunity situation is unique. [00:18:33] Speaker 02: In 2016, all the parties agreed and Judge Howell confirmed in her first memorandum opinion in this case, the 2016 memorandum opinion that the parties didn't dispute. [00:18:49] Speaker 02: The Dutch Court's decision was not going to affect the sovereign immunity question at all. [00:18:55] Speaker 02: It was on that basis that, at the time, Russia was saying, we should just go forward. [00:19:00] Speaker 02: We won't even get into Article 5.1e of the New York Convention. [00:19:03] Speaker 02: Let's just litigate the immunity question. [00:19:06] Speaker 02: That's what we said in 2016. [00:19:08] Speaker 02: And at that time, Holley agreed with us. [00:19:11] Speaker 02: The Dutch Courts can't decide the United States Courts subject matter jurisdiction anyway. [00:19:17] Speaker 02: A separate question is whether or not a foreign court judgment can affect questions under the New York Convention. [00:19:25] Speaker 02: And it is there, as I was discussing with Judge Wilkins, it is there that we have an inherently asymmetrical system by virtue of the text of the New York Convention. [00:19:36] Speaker 02: And the point of this, in addition to the huge stack of foreign judicial authorities that we provided in our reply and in our proposed sub-reply, in addition to all those foreign authorities, there is a policy. [00:19:48] Speaker 02: The New York Convention drafters and signatories wanted to keep the focus on the arbitration. [00:19:54] Speaker 02: They were replacing an even older system, which was called double executor. [00:19:59] Speaker 02: And what that meant was that the judicial stamp of approval [00:20:02] Speaker 02: would be mandatory. [00:20:04] Speaker 02: When the arbitration was done, the parties would rush to get a judicial stamp of approval or disapproval. [00:20:10] Speaker 02: And that entire system was thrown away in 1958 when the New York Convention was put into place. [00:20:16] Speaker 02: Chief Judge Srinivasan, you pointed out that we're getting way, way off track. [00:20:20] Speaker 02: The district court didn't decide. [00:20:21] Speaker 03: I didn't say that. [00:20:23] Speaker 03: I'm just saying that we don't have a determination by the district court on issue preclusion. [00:20:29] Speaker 02: Forgive my over caffeinated characterization of what you actually said, Chief Judge Srinivasan. [00:20:34] Speaker 02: The district court here has not decided this enormously complicated question. [00:20:41] Speaker 00: Can I ask you a question? [00:20:42] Speaker 00: You said that the FSIA includes an arbitration exception, but not [00:20:46] Speaker 00: an exception for comedy to foreign judgments. [00:20:49] Speaker 00: So I'm wondering actually how we should think about that. [00:20:51] Speaker 00: I mean, even if we remanded to the district court for consideration of this issue. [00:20:55] Speaker 00: I mean, as a legal matter, it's possible either the FSIA didn't include that exception, so it doesn't exist, or the FSIA [00:21:07] Speaker 00: left in place the ordinary principles of comedy that courts determine under the Hilton case and those factors. [00:21:15] Speaker 00: And so maybe in some instances, we give comedy to a court for certain jurisdictional type facts, even in a de novo determination. [00:21:24] Speaker 00: Or maybe it means they can't be considered at all. [00:21:27] Speaker 00: But I'm wondering how we should think about the FSAA exceptions. [00:21:30] Speaker 00: Because I think that was an interesting point that you raised. [00:21:33] Speaker 02: Judge Rao, comedy is yet another [00:21:37] Speaker 02: equally complicated way of looking at this question. [00:21:41] Speaker 00: Here, the Dutch- Any question goes to issue preclusion. [00:21:44] Speaker 00: I mean, if I say comedy, I mean about comedy about issue preclusion, you know? [00:21:50] Speaker 02: In either event, Judge Rao, we would need to, on remand, take a step back and acknowledge we're talking about a Dutch court's interpretation of Russian law. [00:22:03] Speaker 02: primarily. [00:22:04] Speaker 02: There is no final word from the Dutch judicial system as to what the Energy Charter Treaty itself means, because in paragraph 5.2.10 [00:22:16] Speaker 02: the Dutch Supreme Court cast doubt on how the Court of Appeal of The Hague had interpreted Article 45.1 of the Energy Charter Treaty. [00:22:25] Speaker 02: And what that means is that with respect to the questions of treaty interpretation, the only issues in this case that could even arguably be characterized [00:22:34] Speaker 02: As questions of Dutch law, although, of course, the energy charter treaty is not just Dutch law, it's also French law and EU law. [00:22:42] Speaker 02: There are a lot of other states with an interest in how the energy charter treaty is interpreted, not just the Dutch, not just the Netherlands. [00:22:52] Speaker 02: If we, if we recognize that all four instances in this case have disagreed about how the treaty is interpreted, the tribunal was overruled by the first instance court, which was overruled by the second instance courts, which was, which was doubt was cast by the Supreme court. [00:23:10] Speaker 02: All that is left is the Russian law questions, which need to be decided under the text of article 45 one of the energy charter treaty. [00:23:20] Speaker 02: a Dutch court is not the authoritative interpreter of Russian law. [00:23:25] Speaker 04: How is that supposed to work, this provisional application of the treaty? [00:23:34] Speaker 04: Only a Russian court decides [00:23:37] Speaker 04: whether provisional application is consistent with Russian law? [00:23:42] Speaker 02: No, Judge. [00:23:43] Speaker 02: Judge Wilkins, a tribunal can decide the question by looking at Russian law. [00:23:48] Speaker 02: A foreign court can decide the question by looking at Russian law. [00:23:52] Speaker 02: And here, one of the elements of Judge Howell's decision that we challenge here is that Judge Howell declined to look to any Russian legal sources. [00:24:06] Speaker 02: Judge Howell declined to decide the treaty, declined to interpret Article 45.1 of the Energy Charter Treaty. [00:24:16] Speaker 02: Judge Howell said that the U.S. [00:24:18] Speaker 02: court was bound by the decision of the tribunal, even though all the Dutch courts had already rejected the reasoning of the tribunal. [00:24:26] Speaker 02: And when it came to decide the Russian law question, Judge Howell looked only at American case law. [00:24:35] Speaker 02: American case law specifically talking about what the word commerce might mean, what a commercial dispute might be. [00:24:41] Speaker 02: And the American legal systems history with the word commerce is very unique. [00:24:47] Speaker 02: And it is certainly not the way Russian courts have decided a completely separate question. [00:24:52] Speaker 02: And the relevant question here is whether disputes under the energy charter treaty [00:24:58] Speaker 02: any disputes arising under Article 26 would be characterized under Russian law as public law or private law. [00:25:08] Speaker 04: So let's suppose if we were to remand to have the district court do that analysis, wouldn't we review that de novo? [00:25:21] Speaker 02: When the lower court evaluates the Russian law questions and the treaty law questions, your review would then be de novo. [00:25:29] Speaker 04: So why send it back? [00:25:31] Speaker 04: If you're right, then why shouldn't we just figure out what Russian law? [00:25:36] Speaker 02: Judge Wilkins, you have that discretion. [00:25:38] Speaker 02: You have the discretion to decide alternative grounds for upholding a lower court's decision. [00:25:44] Speaker 02: However, the very, very usual practice is to remand such questions alternative grounds unless they are straightforward questions of federal law. [00:25:55] Speaker 02: This is a complex case. [00:25:57] Speaker 02: involving treaty interpretation and foreign law. [00:26:00] Speaker 02: And we have not found any instance where this court has decided a question of foreign law that was left undecided at first instance. [00:26:09] Speaker 02: And we list, I think it's the Eshel versus the commissioner case by the DC circuit. [00:26:15] Speaker 02: And there's a long line of other precedents included in the gray brief, our reply brief [00:26:21] Speaker 02: and our proposed sir reply from, I believe that was August. [00:26:26] Speaker 04: I just don't understand why it makes sense to run the railroad that way, send something back down, and then we're gonna review it de novo anyway. [00:26:35] Speaker 04: The what kind of thing that drives district judges crazy, and I'm a former district judge. [00:26:41] Speaker 02: No. [00:26:42] Speaker 02: Understood, Judge Wilkins. [00:26:44] Speaker 02: The way that it has been justified in the past is the allocation of judicial resources. [00:26:49] Speaker 02: that foreign law can be complex. [00:26:52] Speaker 02: Expert opinions need to be evaluated. [00:26:55] Speaker 02: District court judges may want to hear from experts on Russian law, evaluate their credibility, compare the credentials. [00:27:03] Speaker 04: But we already have that in the record. [00:27:06] Speaker 02: Well, there hasn't been a cross-examination of these experts. [00:27:11] Speaker 02: We did propose an evidentiary hearing under Judge Howell's standing order. [00:27:17] Speaker 02: We sent the appropriate email to chambers copying Petitioner's Council, copying Hulley's Council, asking for an evidentiary hearing. [00:27:26] Speaker 02: The scope of such an evidentiary hearing was never really hammered out because we never proceeded to that stage. [00:27:34] Speaker 02: the Judge Howell concluded that it was moot whether our Russian law expert opinion would be docketed or not. [00:27:42] Speaker 02: In one of the footnotes to her judgment, Judge Howell said she would not look at the Russian case law. [00:27:48] Speaker 02: So as Chief Judge Srinivasan said, we would be starting out looking at the Russian law issues now for the first time in the first instance here. [00:27:58] Speaker 02: Now they'll say, of course, there's a there's a beautiful record already established in the Netherlands, but [00:28:04] Speaker 02: As pointed out, as I pointed out, these instances of the arbitration and the courts in the Netherlands have not agreed on these questions. [00:28:13] Speaker 02: They've disagreed every single time. [00:28:15] Speaker 02: So it's very dissimilar to the Chevron versus Ecuador case, which I hope will be 99% of the cases that appear before you. [00:28:24] Speaker 02: where the tribunal was upheld on every ground by all three layers of the Dutch court. [00:28:29] Speaker 02: In Chevron versus Ecuador, there was total harmony coming from the Netherlands as to how that bilateral investment treaty between Ecuador and the United States government should be interpreted. [00:28:40] Speaker 02: Here, you would be forging ahead in your discretion into a complete swamp of disputing experts, disputing tribunals, and disputing Dutch courts going back 20 years. [00:28:53] Speaker 00: Are you aware of any cases where the Supreme Court or a circuit court has grappled with how a court should think about comedy to a foreign sovereign versus comedy to a foreign court? [00:29:08] Speaker 00: So here, arguably, there are two different competing issues of that sort. [00:29:13] Speaker 00: We have Russia on the one hand as a party in this case, and we have the Dutch courts. [00:29:22] Speaker 02: Well, Judge Rao, this begins to sound like animal science products versus Hubei Welcome Pharmacy or pharmaceutical company. [00:29:31] Speaker 02: This is a 2018 decision by the Supreme Court. [00:29:34] Speaker 02: And in that animal science products case, the Supreme Court merely, well, it basically reaffirmed that when we look at foreign law, we [00:29:46] Speaker 02: contemplate a system very similar to the American legal system. [00:29:50] Speaker 02: You give respectful deference to what foreign executive authorities might say, but you allow foreign courts to say definitively, as a matter of binding precedent, even if the foreign court doesn't believe in precedent, foreign courts decide foreign law. [00:30:09] Speaker 02: And this isn't just the 2018 decision. [00:30:12] Speaker 02: This goes back 200 years to Chief Justice Marshall. [00:30:16] Speaker 02: And I believe it, I'm going to struggle to Elmendorf versus Taylor, where he said an English court decides English law, a French court decides French law, and a Kentucky court decides Kentucky law. [00:30:27] Speaker 00: Here, there's no question about the Russian boards deciding the Russian. [00:30:31] Speaker 00: Well, really, the options are the district court looks at Russian law. [00:30:35] Speaker 00: You know, de novo or perhaps it gives, you know, it looks to the Dutch courts. [00:30:41] Speaker 02: In that instance, Judge Rao, I think it would still be very anomalous to say we defer to Dutch courts on Russian law. [00:30:49] Speaker 02: And when we talk about the Energy Charter Treaty, we have to remember that the Dutch courts did not agree with the French court in this case. [00:30:56] Speaker 02: The French court said that all these questions were ambiguous and all these questions needed to be referred to the EU Court of Justice. [00:31:03] Speaker 00: The US is in a party to the [00:31:05] Speaker 00: to the ECT, right? [00:31:07] Speaker 02: It isn't. [00:31:07] Speaker 00: Right. [00:31:08] Speaker 00: Which is all the more- We're not even a signatory to that treaty. [00:31:12] Speaker 02: And this is all the more reason not to play favorites amongst the different members of the European Union, Judge Rao. [00:31:18] Speaker 02: If the Dutch courts are disagreeing with the French courts and the EU executive authorities have agreed with the Russian Federation on how the treaty needs to be interpreted, this question still needs to be approached very carefully [00:31:32] Speaker 02: and meticulously, we can't just rush forward and allow the first court to decide it to be the last court to decide it. [00:31:41] Speaker 03: One question about the ECT. [00:31:44] Speaker 03: So you have a series of arguments as to why you think the ECT doesn't prevail here. [00:31:52] Speaker 03: And if all of those arguments go to scope and not to existence, then even if you think that the district court erred [00:32:02] Speaker 03: in deferring wholesale to the arbitral tribunal's determination of whether it had jurisdiction. [00:32:10] Speaker 03: That still wouldn't matter for this stage of the case, because everything would go to scope rather than existence. [00:32:17] Speaker 03: Am I understanding that right? [00:32:18] Speaker 03: So in other words, in order for us to remand on the issue, if we agreed with you on the issue that the district court rested its decision on, [00:32:28] Speaker 03: We still need to conclude that at least some of your arguments go to the existence, as opposed to the scope. [00:32:35] Speaker 02: Well, Chief Judge Srinivasan, if all of these arguments go to scope, we don't agree with that, but if they go to scope, because there was no exclusive delegation here, [00:32:47] Speaker 02: We still, we still should be allowed to argue these questions under article five, one C of the New York. [00:32:53] Speaker 03: You still have that latitude to do that no matter what. [00:32:55] Speaker 02: Well, if there's an exclusive delegation agreement that applies not only to the FSIA questions of arbitrability, but to all arbitrability questions. [00:33:06] Speaker 03: Yeah, I take that point. [00:33:07] Speaker 03: But suppose that we, I'm just engaging in a hypo where we [00:33:11] Speaker 03: We reject that part of the district court's assessment. [00:33:14] Speaker 03: And we agree with your competence, competence determination. [00:33:18] Speaker 03: But then in order for you to still have room to go on jurisdiction, you still have to show that your arguments as to the ECT go not to scope, but to existence. [00:33:32] Speaker 02: That's right. [00:33:33] Speaker 02: A scope question, whatever that might mean, and we may be talking about that next, a scope question, question of the scope of the issues that the parties agreed to arbitrate is not a jurisdictional question under the Foreign Sovereign Immunities Act as held in Chevron versus Ecuador. [00:33:50] Speaker 02: Now, the question of whether these arguments are scope questions or not was not carefully and meticulously explained in the district court's judgment. [00:34:02] Speaker 03: That's what I was going to say. [00:34:03] Speaker 03: But the district court did engage. [00:34:04] Speaker 03: The district court went through them because the district court had the first part of the analysis where the court relied on the tribunal's assessment. [00:34:12] Speaker 03: That's right. [00:34:12] Speaker 03: But then it went on to address your arguments and rejected them. [00:34:17] Speaker 02: That's true. [00:34:18] Speaker 02: Now, it will look at this. [00:34:20] Speaker 02: The two are forgive me. [00:34:21] Speaker 02: I've gone way over. [00:34:22] Speaker 02: But so we'll look at the two arguments regarding energy charter treaty interpretation that we've raised in this appeal. [00:34:32] Speaker 02: The first question under Article 45 one of the energy charter treaty about whether Russian law allowed Article 26 to come into effect or not. [00:34:43] Speaker 02: In the red brief in this case, Hawley described that as a validity argument. [00:34:49] Speaker 02: According to Next Era versus the Kingdom of Spain, either validity arguments or existence arguments are jurisdictional under the Foreign Sovereign Immunities Act. [00:35:00] Speaker 02: I would say that even to decide who is right about that, whether we are right that it's an existence argument or Hawley is right that it's a validity argument, [00:35:09] Speaker 02: That requires itself interpretation of the Energy Charter Treaty and Russian law. [00:35:14] Speaker 02: And for the reasons discussed with Judge Wilkins, this panel may wish to spend the next nine or 10 months focusing on that question alone. [00:35:24] Speaker 02: Maybe it'll go faster with this court. [00:35:26] Speaker 02: But that question alone requires remand. [00:35:29] Speaker 02: It's so complex to decide whether it's an existence question or a validity question that [00:35:34] Speaker 02: the district court should be given an opportunity to decide that in the first instance. [00:35:38] Speaker 03: OK, so we'd have to conclude that there was at least a possibility that it's an existence question as opposed to a scope question. [00:35:45] Speaker 03: Because if there's no possibility, then you can't get home on jurisdiction anyway. [00:35:48] Speaker 02: Well, if it's a question of validity, then it's still a question of existence according to next error versus. [00:35:53] Speaker 02: And that's how they characterized it in the red brief. [00:35:56] Speaker 02: They may imminently based on the last sentence in their final 28 J letter. [00:36:01] Speaker 02: They may very shortly be trying to re characterize their early argument and say, Oh, no, no, not validity. [00:36:07] Speaker 02: We met scope. [00:36:08] Speaker 02: I don't believe they should do that. [00:36:10] Speaker 02: I don't believe they should be permitted to do that since they so resoundingly said it was a validity argument in the red brief. [00:36:18] Speaker 02: But the point here is that there are no private law claims that can arise under the Energy Charter Treaty as properly interpreted. [00:36:27] Speaker 02: So Article 45.1, bringing in Russian law, ousts the entirety of Article 26. [00:36:35] Speaker 02: For that reason, it's not a scope question. [00:36:37] Speaker 02: We're not talking about our case. [00:36:39] Speaker 02: We're saying any conceivable ECT case. [00:36:42] Speaker 02: Now they may re-characterize that and that's why I've reserved three minutes for rebuttal. [00:36:47] Speaker 02: The final question and again we'll stay on Nextera very briefly. [00:36:53] Speaker 02: Nextera can't be read in conflict with Chevron versus Ecuador. [00:36:57] Speaker 02: Chevron versus Ecuador said there must be an agreement between the parties. [00:37:03] Speaker 04: Chevron didn't mean parties necessarily before the court. [00:37:08] Speaker 04: Obviously, it was referring to parties to a treaty and then their beneficiaries. [00:37:14] Speaker 02: Well, precisely, Judge Watkins, you've read my mind under the next era paradigm, where you forget all this confusing stuff about after offers and acceptance under this paradigm, where you look at the original agreement between the Netherlands and Luxembourg in Spain, [00:37:31] Speaker 02: Even under this paradigm, the question of whether they are third party beneficiaries is not a question of scope traditionally. [00:37:40] Speaker 02: Traditionally, that is a question of existence. [00:37:43] Speaker 02: That is the question that was being litigated in First Options versus Kaplan. [00:37:47] Speaker 02: Nobody disputed in First Options versus Kaplan before the Supreme Court. [00:37:51] Speaker 02: The corporate entities, First Options of Chicago and MK Investment had an arbitration agreement. [00:37:57] Speaker 02: And the question of whether Mr. Kaplan and Mrs. Kaplan had rights under that agreement was a question or obligations to arbitrate. [00:38:05] Speaker 02: That was analyzed as a question of whether those rights and obligations exist. [00:38:10] Speaker 02: You could linguistically phrase it as a scope question and ask, does Mr. Kaplan fall within the scope of the agreement? [00:38:16] Speaker 02: Does Mrs. Kaplan fall within the scope of the agreement? [00:38:18] Speaker 02: But that is not how the Supreme Court analyzed that question. [00:38:22] Speaker 02: Their rights as third party beneficiaries [00:38:26] Speaker 02: would also be an FSIA question and a jurisdictional question. [00:38:31] Speaker 02: In fact, I'm quite sure that NextEra is on to something. [00:38:35] Speaker 02: by saying you should look at the original agreement. [00:38:37] Speaker 02: Because Senator Luber and Senator Mathias didn't say anything about offers and acceptance and treaties and investor state arbitration in 1988. [00:38:47] Speaker 02: When they enacted the arbitration exception, they said, with or for the benefit. [00:38:51] Speaker 02: And it would be absolutely stunning and anomalous if that clause, with or for the benefit of a private party, could be invoked by somebody who is not the private party. [00:39:03] Speaker 02: their rights as third party beneficiaries would also be a jurisdictional question under the Foreign Sovereign Immunities Act. [00:39:12] Speaker 03: Make sure my colleagues don't have additional questions for you at this time. [00:39:14] Speaker 03: We'll give you a little bit of time for rebuttal. [00:39:25] Speaker 01: Mr. Shepard. [00:39:27] Speaker 01: Morning, Your Honors. [00:39:27] Speaker 01: May it please the Court, Steven Shepard, for the shareholders. [00:39:31] Speaker 01: This Court should affirm [00:39:33] Speaker 01: for three independent reasons I'd like to discuss. [00:39:36] Speaker 01: First, the Russian Federation has not carried its burden to refute the existence of an arbitration agreement. [00:39:46] Speaker 01: The district court was correct on that point and should be affirmed. [00:39:49] Speaker 01: That agreement is contained in the ECT, and the Russian Federation agreed to apply it. [00:39:55] Speaker 01: The second reason to affirm, the Russian Federation should be precluded from relitigating the question. [00:40:02] Speaker 01: of whether there is the existence of an arbitration agreement. [00:40:07] Speaker 01: The elements of issue preclusion are all met. [00:40:11] Speaker 01: I'll address there the one argument we heard on the one element, which is contrary to black letter restatement law. [00:40:20] Speaker 01: And the third reason, Your Honor, the district court correctly held that the Russian Federation's arguments below [00:40:27] Speaker 01: were not jurisdictional in the first place, because those arguments did not challenge the existence of the arbitration agreement. [00:40:36] Speaker 01: That was the district court's first reason before even turning to say, well, if these are under the FSIA, then I will therefore delegate, I will defer to the arbitrator's decisions as to these scope non-existential questions that do not go to existence. [00:40:53] Speaker 01: The next error decision makes clear that it's only the existence of the arbitration agreement, and that the ECT itself contains an agreement to arbitrate. [00:41:03] Speaker 00: Mr. Sheppard, why isn't it an error of law to defer, to give binding deference to an arbitral tribunal over a jurisdictional fact? [00:41:16] Speaker 00: How is that consistent with our general principles that Article III courts have an independent obligation to determine their jurisdiction? [00:41:23] Speaker 01: The ultimate question of whether sovereign immunity exists, of course, is for the district court. [00:41:29] Speaker 01: But whereas here, there is an element, a jurisdictional fact to be found, and where the agreement from, and where the another court, the Dutch courts in particular, have already found that, issue preclusion would be appropriate. [00:41:44] Speaker 00: As for- Well, I'm not talking about the arbitral tribunal, which is the reasoning for the district court's opinion. [00:41:52] Speaker 01: Yes, Your Honor. [00:41:53] Speaker 01: As to the existence of an arbitration agreement, this court has held in Chevron and Stillex that that issue is to be determined de novo by the district court. [00:42:01] Speaker 00: And so how can it be a de novo determination to defer to an arbitral tribunal? [00:42:08] Speaker 01: The district court correctly determined that the Russian Federation had not carried its burden. [00:42:17] Speaker 00: The district court was- Because it deferred to the arbitral [00:42:20] Speaker 00: Part of the district court's reasoning was based on believing that it was bound by the... So what's the best legal justification for deferring to an arbitral panel on a jurisdictional fact? [00:42:30] Speaker 01: The best argument, Your Honor, here is that here, unlike in Chevron and Stillex, the Russian Federation made a separate agreement in its July 29, 2005, letter relied on by the district court in which the Russian Federation stated [00:42:46] Speaker 01: that it had reached the determination for the arbitrators to determine their own jurisdiction. [00:42:52] Speaker 01: The argument we hear from the Russian Federation is that that letter didn't go far enough, that there needed to be the additional sentence that says, and furthermore, we say that this delegation of power to the arbitrators is exclusive and that no one else shall determine. [00:43:09] Speaker 01: So the Russian Federation says, because that sentence was not in the letter, [00:43:13] Speaker 01: Therefore, the letter doesn't constitute a separate agreement by us to delegate this power to the arbitrators. [00:43:19] Speaker 01: On that argument, Your Honor, they're wrong as a matter of United States law. [00:43:25] Speaker 01: All of the cases that they cite and point to are from other jurisdictions. [00:43:31] Speaker 01: No United States court that they have cited has looked at an agreement [00:43:37] Speaker 01: including the UNSATRA rules that give this power to the arbitrators, and certainly including something like the July 2005 letter. [00:43:45] Speaker 01: No US court has looked at that and said, this is insufficiently clear. [00:43:51] Speaker 01: This initial delegation doesn't go far enough. [00:43:55] Speaker 01: It needs to say that it's exclusive. [00:43:57] Speaker 01: In fact, Your Honor, US courts have said exactly the opposite. [00:44:02] Speaker 01: In the shoot. [00:44:03] Speaker 00: In a question involving subject matter jurisdiction, [00:44:09] Speaker 03: Because they've come up in Chevron and the other cases, they come up on arbitrability. [00:44:14] Speaker 03: They don't come up on the threshold question of jurisdiction. [00:44:16] Speaker 00: So it's about arbitrability, not about jurisdiction. [00:44:19] Speaker 00: Do you have any cases where that is the case about subject matter jurisdiction? [00:44:23] Speaker 01: No, Your Honor. [00:44:25] Speaker 00: So then arguably, that's an issue of first impression. [00:44:28] Speaker 00: And so I'm not hearing a legal argument about why that is an appropriate legal determination. [00:44:38] Speaker 01: The argument is that the delegation here was so clear to the arbitrators to make this decision. [00:44:43] Speaker 00: No, but you're not answering my question. [00:44:45] Speaker 00: My question is, why is it appropriate for an Article III court to defer to the arbitral tribunal on a jurisdictional fact? [00:44:56] Speaker 01: Because the sovereign made the threshold agreement to have the arbitrators decide that decision, Your Honor, to make that decision. [00:45:06] Speaker 01: Even turning past the district courts reliance that on the findings of the arbitral tribunal. [00:45:13] Speaker 01: The first point that I really want to make is the Russian Federation has not carried its burden and that a remand this [00:45:20] Speaker 01: Two weeks from today, as to refute the existence of the arbitration agreement. [00:45:27] Speaker 01: Under the burden shifting framework, this court has repeatedly applied. [00:45:31] Speaker 01: Shareholders met their initial burden by producing the ECT, the notices, and the awards. [00:45:37] Speaker 01: The burden shifts to the Russian Federation. [00:45:39] Speaker 01: They have not carried that burden. [00:45:41] Speaker 01: Here's why, Your Honor. [00:45:44] Speaker 01: The ECT became binding on the Russian Federation when it signed the treaty. [00:45:50] Speaker 01: That's what Article 45-1 says. [00:45:52] Speaker 01: Each signatory agrees to apply the treaty provisionally to the extent not inconsistent with its constitution, statutes, and regulations. [00:46:03] Speaker 01: No ratification was required under Article 45-1. [00:46:07] Speaker 01: Russian law is the same in the federal law on international treaties to the extent not inconsistent with Russian constitution, statutes, or regulations. [00:46:19] Speaker 01: There's nothing in the Russian Constitution that's inconsistent with provisional application. [00:46:25] Speaker 01: We put excerpts of the Russian Constitution in the record. [00:46:28] Speaker 01: The other side hasn't pointed to anything. [00:46:30] Speaker 01: Same with regulations. [00:46:32] Speaker 01: And as for statutes, well, there is a Russian statute that talks about provisional application. [00:46:39] Speaker 01: It's the federal law on international treaties. [00:46:41] Speaker 01: It's in the addendum at pages 129 through 130. [00:46:45] Speaker 01: And in Article 23.1, it says yes. [00:46:48] Speaker 01: the Russian Federation may provisionally apply treaties. [00:46:52] Speaker 01: And that article has no reservations or exceptions whatsoever for any kind of provisional treaty. [00:47:00] Speaker 01: The history, as we've shown in the expert report cited, is that the Russian Federation has provisionally applied hundreds of treaties, including the 1990 maritime agreement that sets the border in the Bering Strait. [00:47:14] Speaker 01: Who has the authority? [00:47:15] Speaker 01: to make the decision to provisionally apply a treaty. [00:47:19] Speaker 01: The same statute answers that question as well in Article 23.2, which states that whenever the Russian government, the executive branch, is the body that has taken the decision to apply a treaty, then it also may make the decision as to provisional application. [00:47:36] Speaker 01: That's precisely what happened here. [00:47:38] Speaker 01: Pages 209 through 211 of the appendix are the official documents from the Russian government deciding to sign the ECT and authorizing Deputy Chairman Davidov to do it. [00:47:51] Speaker 01: And don't just take my word for all this, Your Honor. [00:47:53] Speaker 01: The Russian Federation, on three separate occasions, assured the world the other signatories to the Energy Charter Treaty [00:48:01] Speaker 01: that it was, in fact, provisionally applied. [00:48:04] Speaker 01: That's at pages 267, 271, and 274 of the appendix. [00:48:10] Speaker 01: Clear statements from the Russian Federation assuring everyone that it was provisionally applying the treaty from the date of signature, again, without any reservation or exception. [00:48:20] Speaker 00: Mr. Shepard, assume that we agree with your colleagues on the other side, that the district court does have to determine subject matter jurisdiction de novo. [00:48:30] Speaker 00: Can you talk about issue preclusion in the Dutch courts? [00:48:35] Speaker 00: How should the court think about whether there is issue preclusion? [00:48:41] Speaker 01: Yes, thank you, Your Honor. [00:48:42] Speaker 01: Issue preclusion, all of the elements of issue preclusion are met here. [00:48:48] Speaker 01: At the outset, we are not saying, no one is saying that the ultimate issue of sovereign immunity [00:48:55] Speaker 01: was decided by the Dutch courts. [00:48:58] Speaker 01: Of course not. [00:48:59] Speaker 01: All we are saying is one element of the FSIA, the existence of the arbitration agreement, whatever that means, whatever argument the Russian Federation has was previously made to the Dutch courts. [00:49:11] Speaker 01: The elements are met. [00:49:12] Speaker 01: The issues are the same. [00:49:15] Speaker 01: The Dutch courts review was de novo, granting no deference to the arbitrators. [00:49:20] Speaker 01: That's at page 229 of the appendix. [00:49:23] Speaker 01: And the Dutch courts clearly had jurisdiction to make these decisions because the Russian Federation chose the Dutch courts for that purpose. [00:49:31] Speaker 01: It was the Russian Federation that elected to have these arbitrations held in the Hague, which made the Dutch courts the primary jurisdiction. [00:49:39] Speaker 01: After the arbitrations were done, it was the Russian Federation that went to those courts and asked them to decide this question. [00:49:47] Speaker 00: I mean, the issue preclusion questions here are not entirely the same as issue preclusion for domestic courts, right? [00:49:55] Speaker 00: So we're thinking about principles of comedy and reciprocity. [00:49:58] Speaker 00: And here we have the unusual situation where we have a foreign court, but we also have a foreign sovereign that is the defendant. [00:50:07] Speaker 00: And are you aware of any cases that deal with how a court should think about those issues? [00:50:16] Speaker 01: In our surreply, Your Honor, we cite two district court decisions that have applied issue preclusion and claim preclusion in Foreign Sovereign Immunities Act cases. [00:50:27] Speaker 00: There are- Involving a foreign judgment and a foreign defendant. [00:50:31] Speaker 01: Those were both domestic US judgments. [00:50:34] Speaker 00: Well, that's not what I'm asking. [00:50:39] Speaker 00: So this is also then a question of first impression. [00:50:47] Speaker 01: It would, it is not a question. [00:50:54] Speaker 01: There are so many principles of black letter law that apply here, but putting them all together to say foreign sovereign and combines all of them together. [00:51:07] Speaker 06: Because that's why the FSIA kicks in. [00:51:16] Speaker 01: Your Honor, FSIA, subject matter jurisdictions, can be subject to res judicata. [00:51:22] Speaker 01: Otherwise, there would be endless 60B attacks for a lack of jurisdiction seeking to relitigate. [00:51:28] Speaker 03: At some level, that's true. [00:51:30] Speaker 03: But on the applicability of issued preclusion in the context of this case, the police raises some interesting questions that haven't been completely vetted by any court. [00:51:42] Speaker 03: There are some questions like that. [00:51:43] Speaker 03: Yes, your honor. [00:51:45] Speaker 03: Do you know, has the United States taken a position on the application of issue preclusion in this kind of setting? [00:51:51] Speaker 01: I'm not aware that it has taken a position one way or another. [00:51:54] Speaker 01: Staying on issue preclusion. [00:51:56] Speaker 01: Mr. Reasonberg attempted to challenge the elements of issue preclusion on one point. [00:52:01] Speaker 01: point he was making was that the Dutch decisions as to the existence of the arbitration agreement are, in his view, insufficiently final and preclusive. [00:52:12] Speaker 01: Mr. Riesenberg is distorting what the law is. [00:52:15] Speaker 01: Section 487 of the Restatement Fourth of Foreign Relations Law states that a foreign judgment won't be given greater preclusive effect in the United States [00:52:27] Speaker 01: then the judgment would be accorded in the state of origin. [00:52:32] Speaker 01: The test under 487 is, have the foreign courts finally decided this? [00:52:38] Speaker 01: Is the question done? [00:52:39] Speaker 01: Does it have a preclusive effect in the foreign courts? [00:52:43] Speaker 01: And here we have the answer. [00:52:46] Speaker 01: In the March 2024 decision of the Dutch Supreme Court in the course of parallel enforcement proceedings by the shareholders, the Dutch Supreme Court held [00:52:56] Speaker 01: that the earlier decision as to the existence of the arbitration agreement is final. [00:53:01] Speaker 01: In fact, that court called it irreversible. [00:53:04] Speaker 01: That's at page 477 of the joint addendum. [00:53:08] Speaker 01: So that opinion, which the district court did not have the benefit of, is from the Dutch Supreme Court, and it answers the question. [00:53:16] Speaker 01: This is a final, preclusive, [00:53:19] Speaker 01: decision by the Dutch courts that an agreement to arbitrate exists. [00:53:22] Speaker 01: And for just that reason, these arbitral awards are being enforced in the Netherlands. [00:53:27] Speaker 01: The only other argument the Russian Federation has made about the elements of issue preclusion, the only one, is a claim made below that there was fraud during the Dutch proceedings. [00:53:42] Speaker 01: Just to set how this came about, the district court accepted supplemental briefs after the Dutch opinions. [00:53:48] Speaker 01: In our June 2022 brief, we raised issue preclusion. [00:53:51] Speaker 01: In response, at ECF 246-1, the Russian Federation made one argument. [00:53:57] Speaker 01: It said, you can't give issue preclusive effect because there was fraud on the Dutch courts. [00:54:05] Speaker 01: But the Russian Federation cited no evidence. [00:54:08] Speaker 01: The sole citation was to seven paragraphs in a reply brief they had filed in the Amsterdam Court of Appeal. [00:54:16] Speaker 01: And now the Amsterdam Court of Appeal has answered the question in February of 2024. [00:54:24] Speaker 01: And this decision was one that the district court did not have the benefit of. [00:54:28] Speaker 01: when it decided not to address the issue of issue proclamation. [00:54:31] Speaker 03: Well, maybe the district court then should have the benefit of it and address the issue of proclamation in the first instance. [00:54:37] Speaker 03: That's a possible route. [00:54:38] Speaker 01: It certainly is a possible route, Your Honor. [00:54:40] Speaker 01: I'd like to note that two weeks from today will mark the [00:54:45] Speaker 01: 20th anniversary of the beginning of these arbitrations. [00:54:49] Speaker 01: November 2nd, 2004 was the date on which my clients delivered to President Putin the formal notification of their claims. [00:54:58] Speaker 01: In the 20 years since then, first, the unanimous arbitral tribunal, including Judge Stephen Schwable, appointed by the Russian Federation, agreed there was an agreement to arbitrate, and now the Dutch courts have finally decided the same. [00:55:11] Speaker 01: So we respectfully ask that this court affirm this threshold FSIA issue because an agreement to arbitrate existed, and then remand, not for further FSIA proceedings, but for finally addressing the Article 5 issues and for confirmation of these awards. [00:55:31] Speaker 03: Make sure my colleagues don't have additional questions for you. [00:55:33] Speaker 03: Thank you, counsel. [00:55:34] Speaker 03: Thank you. [00:55:40] Speaker 03: Thank you, Your Honours. [00:55:48] Speaker 02: My friend on the other side has congratulated us on the 20th anniversary of this dispute between the Russian mafia and the Russian government. [00:55:59] Speaker 02: The current delay with respect to this appeal was not caused by the Russian Federation. [00:56:04] Speaker 02: There are lawyers, incredible lawyers, working on the other side who have written whole books about competence. [00:56:11] Speaker 02: And if they wanted to make this US litigation go faster, they should have consulted those lawyers who know exactly what competence competence means. [00:56:20] Speaker 02: And they never would have raised this argument about exclusive delegation, which is what has caused the present delay. [00:56:26] Speaker 02: We are down a cul-de-sac arguing about whether this competence competence clause [00:56:32] Speaker 02: means exclusive delegation to the arbitrators or merely allowing the arbitrators to finish their work without judicial interference. [00:56:40] Speaker 02: They always knew the answer, or at least their French lawyers always knew the answer, and their Dutch lawyers always knew the answer. [00:56:46] Speaker 02: And if they didn't want to delay this US litigation, they could have dropped that argument. [00:56:51] Speaker 02: So the delay is not any reason to [00:56:55] Speaker 02: break from regular order and send down complicated questions of foreign law and treaty interpretation for the district court to have, as you said, Chief Judge Srinivasan, the first shot at those complicated questions. [00:57:09] Speaker 02: Second, my friend on the other side said that there is black letter restatement law about issue preclusion in this circumstance. [00:57:17] Speaker 02: It is true that the restatement has proposed that issue preclusion could apply under the New York Convention, but the restatement does not talk at all in that section of its analysis about the immunity question which Judge Rao was pointing to. [00:57:33] Speaker 02: There is no discussion in the restatement whatsoever about whether an American court should be bound by a foreign court [00:57:40] Speaker 02: with respect to a third state's foreign sovereign immunity. [00:57:44] Speaker 02: That's not even discussed in the restatement. [00:57:47] Speaker 02: And in any event, the restatement section that he is citing from the Restatement on International Arbitration fails to deal with the Second Circuit. [00:57:56] Speaker 02: And again, the Second Circuit has explicitly said in SARHANK and in VRG that when we're asking whether parties agreed to arbitrate, we do not defer to the Egyptian courts or the Brazilian courts. [00:58:08] Speaker 02: And that would apply here. [00:58:09] Speaker 02: we would not defer to the Dutch courts unless there's a decision granting annulment, which is an entirely different situation that we don't have here. [00:58:18] Speaker 02: My friend on the other side also said that Russian law supports his argument. [00:58:25] Speaker 02: He sided to the 1995 federal law on international treaties. [00:58:30] Speaker 02: Once again, the district court did not analyze that Russian statute or discuss what it might mean. [00:58:35] Speaker 02: There is a provision on provisional application. [00:58:38] Speaker 02: There is also a provision under Article 15 of that same Russian statute, which says that any treaty that departs from background Russian law, Russian statutory law, and then I could just finish my answer, Chief Judge Trina Boston, any such treaty needs to be ratified. [00:58:55] Speaker 02: Petitioners are, Hulley is making the point that supposedly the executive branch of the Russian Federation can supercharge its executive power [00:59:07] Speaker 02: by changing the label on a treaty. [00:59:10] Speaker 02: If the Russian government and I'm not talking about the president, I'm talking about a lower level of the executive, basically the administrative branch of the Russian government. [00:59:19] Speaker 02: If they sign a treaty into force, it can't violate a statute. [00:59:23] Speaker 02: But if they change the label, [00:59:24] Speaker 02: and say this isn't this treaty isn't enforced by virtue of my signer. [00:59:28] Speaker 02: This is a provisionally applicable treaty. [00:59:30] Speaker 02: Suddenly they can violate a statute that was enacted by the Russian Parliament and signed by the Russian president. [00:59:36] Speaker 02: That would be a highly anomalous and absurd interpretation of the Russian legal system. [00:59:40] Speaker 02: The district court here should have the chance to hear those arguments in full. [00:59:44] Speaker 04: What role does article I think it's 45 to play? [00:59:49] Speaker 04: Because there, under the ECT, Russia could have explicitly said we're not going to provisionally apply this treaty, right? [00:59:59] Speaker 02: Judge Wilkins, you're right. [01:00:00] Speaker 02: There is a separate approach where if a country doesn't want to involve the complex [01:00:10] Speaker 02: a conflict analysis that Article 45-1 requires. [01:00:15] Speaker 02: They can just simplify their lives by issuing a declaration which says, as a political matter, we don't want anybody ever to analyze whether the Energy Charter Treaty's individual provisions violate individual provisions of our laws. [01:00:31] Speaker 02: We would like to avoid that headache. [01:00:33] Speaker 02: I now, of course, wish that the Russian Federation had issued such a declaration, but that's an entirely separate mechanism. [01:00:39] Speaker 02: And none of the instances of the proceedings in the Netherlands, not the tribunal, not the first instance court, not the second instance court or the third instance court, have ever said issuing such a declaration was necessary to rely upon the limitation clause of Article 45.1, which is automatic, which requires no declaration. [01:01:01] Speaker 02: It's a self-executing, [01:01:02] Speaker 02: limitation on which provisions of the Energy Charter Treaty apply to a signatory or not during the time period before graduating to the level of contracting party, which is the level where Spain and Luxembourg and the Netherlands position themselves within the ECT structure. [01:01:25] Speaker 03: Thank you, Council. [01:01:26] Speaker 03: Thank you to both, Council. [01:01:27] Speaker 03: We'll take this case on for discussion.