[00:00:00] Speaker 01: Case number 25-70-05. [00:00:03] Speaker 01: Stable LLC et al. [00:00:04] Speaker 01: versus Russian Federation at balance. [00:00:07] Speaker 01: And case number 25-70-64. [00:00:10] Speaker 01: JSC Detect Criminergo versus Russian Federation at balance. [00:00:14] Speaker 01: Mr. Perla for Ballant Russian Federation. [00:00:17] Speaker 01: Ms. [00:00:17] Speaker 01: Cheek for Appellee JSC Detect Criminergo. [00:00:20] Speaker 01: Mr. Boykin for Appellee Stable LLC et al. [00:00:23] Speaker 05: Good morning, counsel. [00:00:25] Speaker 00: Good morning. [00:00:26] Speaker 00: Good morning, Your Honors. [00:00:28] Speaker 00: Juan Perlov, Curtis Malay, for the appellant, the Russian Federation. [00:00:31] Speaker 00: I have reserved seven minutes of my time for rebuttal, and may please the court. [00:00:39] Speaker 00: The Foreign Sovereign Immunities Act conditions a court's subject matter jurisdiction on satisfying an exception to sovereign immunity. [00:00:47] Speaker 00: The only exception that could possibly apply here is the arbitration exception. [00:00:52] Speaker 00: And under that exception, as this court has repeatedly made clear, courts must independently satisfy themselves of the existence of a validly formed arbitration agreement with or for the benefit of the parties. [00:01:08] Speaker 00: At its core, these appeals present a basic question of contract law. [00:01:12] Speaker 00: Has a valid agreement been formed where the party purporting to accept an offer is not the party [00:01:20] Speaker 00: or a member of the class to whom the offer was directed. [00:01:24] Speaker 00: And we all learned in first year contracts class that the answer to that question. [00:01:28] Speaker 05: It doesn't matter whether the offer is just directed or can impact that other party. [00:01:35] Speaker 00: It has to be directed to the other party. [00:01:38] Speaker 00: The terms of the offer have to be plainly directed so that the person who purports to accept it has the power to accept it. [00:01:47] Speaker 00: And that is because the offeror is the master of the offer and only the terms of the offer can dictate who has the power to accept it. [00:01:56] Speaker 00: We cited several cases in our briefs that make this basic point. [00:02:00] Speaker 00: A letter containing an offer addressed to a specific person cannot be accepted by their roommate, even though they live at the same address. [00:02:09] Speaker 00: A person who works for Walmart in Mississippi cannot accept an offer of employment benefits made to Walmart employees who work in Illinois. [00:02:16] Speaker 03: So why doesn't this not just go to the scope as opposed to the existence of the arbitration agreement under Holly and Junction? [00:02:27] Speaker 00: Scope is one of those terms that gets tossed around a little bit in the cases, but it's not a question of scope. [00:02:35] Speaker 00: in a vacuum. [00:02:37] Speaker 00: There are scope issues as to an agreement that already exists and what falls within it. [00:02:43] Speaker 00: But there's also, as Stabil actually pointed out in their brief, the concept of scope of an offer. [00:02:50] Speaker 03: But you agree that there is an arbitration agreement. [00:02:53] Speaker 03: I mean, there is an arbitration. [00:02:55] Speaker 03: There's a treaty and there's an arbitration term in it. [00:02:57] Speaker 03: And this is just whether these Ukrainian companies fall within the scope of it. [00:03:03] Speaker 00: No, there is no agreement, certainly not between the parties. [00:03:08] Speaker 00: And the arbitration clause in the ECT has to be looked at for its terms to see who has the power to accept the offer that it's in it. [00:03:17] Speaker 00: The court in Nextera made very clear that, and I'd like to read from the language of Nextera. [00:03:23] Speaker 05: But if Russia never intended to extend an offer to arbitrate to the parties like yourself, how could the agreement even exist in the first place? [00:03:31] Speaker 05: such that 1605 would apply? [00:03:35] Speaker 00: Well, the fact that there is a arbitration clause in the investment treaty goes to the fact that it's there, but it doesn't necessarily end the inquiry. [00:03:47] Speaker 00: You still have to look at the terms of the actual provision to see who was it directed at? [00:03:53] Speaker 00: Who are the members of the class that have the power to accept it? [00:03:58] Speaker 00: In cases outside this circuit, for example, in the Fifth Circuit, you have the Al-Waleed case in which the plaintiffs came in waving around an arbitration agreement and saying, we've satisfied our obligation under the arbitration exception to have jurisdiction. [00:04:14] Speaker 00: And the Fifth Circuit said, no, that arbitration agreement that exists is not between the parties to the action. [00:04:21] Speaker 00: It's not for the benefit of the parties to the action as a result. [00:04:25] Speaker 00: So there, the Fifth Circuit said, there is no jurisdiction under the arbitration exemption because there is no relevant agreement that exists between the parties. [00:04:36] Speaker 00: And that's what we have here. [00:04:37] Speaker 00: We have a situation where [00:04:39] Speaker 00: the petitioners have come into the tribunal into this court waving around an arbitration clause saying we have the power to invoke that clause. [00:04:48] Speaker 00: But the problem is that based on what this court held in next era, when we look at the language of the treaty, we find that they are not the parties or the class of or members of a class that are that have the power to accept it. [00:05:03] Speaker 00: And why is that? [00:05:04] Speaker 00: Because the arbitration clause says that you have to be a [00:05:09] Speaker 00: investor from a contracting party that made an investment in the territory of the other contracting party. [00:05:16] Speaker 00: That is the basic. [00:05:17] Speaker 03: So why isn't this case governed by Hully? [00:05:20] Speaker 03: Because in Hully, there was a similar argument where Russia argued that even if it did make a standing offer to arbitrate by signing the treaty, the shareholders are not proper beneficiaries of the arbitration clause. [00:05:33] Speaker 03: And that went to scope. [00:05:34] Speaker 03: And that just seems similar to what you're arguing here, that we do have an arbitration [00:05:39] Speaker 03: clause, we do have a treaty, but these Ukrainian companies don't fall within. [00:05:45] Speaker 03: that, just like the shareholders in Holley. [00:05:47] Speaker 03: This seems very similar to me. [00:05:49] Speaker 00: It's different because in Holley, the claimants to the arbitration fell within the terms of the treaty. [00:05:58] Speaker 00: They were incorporated in... Well, they argued that there was a dispute about that, but that just goes to scope. [00:06:04] Speaker 03: And the same thing here, the Ukrainian companies say they fall within the scope of the treaty. [00:06:09] Speaker 03: You don't think so. [00:06:09] Speaker 03: It seems really similar to me. [00:06:12] Speaker 00: Again, because the term scope, it's not a term of art. [00:06:16] Speaker 00: It's not dispositive of whether it's a formation or a agreement that exists and what falls within it. [00:06:22] Speaker 00: The concept of scope can go to both formation in the sense of the scope of the offer, like in all the cases in contract. [00:06:28] Speaker 03: No, I understand that. [00:06:29] Speaker 03: But I'm saying, why isn't your argument governed by Hully? [00:06:34] Speaker 03: Because Hully has decided this. [00:06:35] Speaker 03: I understand you're making an argument that this doesn't go to scope. [00:06:39] Speaker 03: But how do you distinguish this case from Hully? [00:06:41] Speaker 00: Because again, a couple of reasons. [00:06:44] Speaker 00: One, in Hawley, the claimants already fit within the facial terms of the treaty and they were trying to argue. [00:06:51] Speaker 03: They disputed that. [00:06:54] Speaker 00: They being Russia. [00:06:56] Speaker 03: Yeah. [00:06:57] Speaker 00: Well, Russia made an argument that because the investors were ultimately controlled by Russian citizens, they weren't the kinds of investors who could get to the very similar to your argument here that because the Ukrainians at the time. [00:07:13] Speaker 03: were investing in Ukraine and later became Russia. [00:07:15] Speaker 03: It just seems like a very similar kind of argument, that you're disputing a fact that would make them not part of the treaty or not. [00:07:23] Speaker 03: So it's not exactly the same, but it's the same type of argument. [00:07:27] Speaker 00: It's the inverse. [00:07:28] Speaker 00: And the fact that it's the inverse, I think, matters. [00:07:31] Speaker 00: And that's putting aside the second part, which I'd like to get to, which is that there was no dispute in Hulley that those investors had invested in the territory of the other contracting party. [00:07:42] Speaker 00: So they were only looking at the fact of, do you qualify as an investor based on your nationality? [00:07:48] Speaker 00: Kind of like in Nextera, right? [00:07:50] Speaker 03: So in this case, do you qualify as being part of this treaty because there was a change in [00:07:55] Speaker 03: in, I guess, control. [00:07:58] Speaker 00: No, it's not a matter of do you qualify as an investor. [00:08:00] Speaker 00: It's a matter of are you the kind of person, a foreign investor, for whom the benefit or the benefit for whom the treaty was entered into? [00:08:10] Speaker 03: I guess it's a timing issue. [00:08:12] Speaker 03: You're a foreign, maybe you weren't a foreign investor at the time of the treaty's inception, but you were at the time of the [00:08:19] Speaker 00: Expropriation and that's the critical difference. [00:08:22] Speaker 00: We think that goes to scope. [00:08:24] Speaker 00: It doesn't go to scope. [00:08:25] Speaker 00: It's more like the holly issue and it's the first holly issue in terms of the provisional application of the treaty. [00:08:32] Speaker 00: Did the provision did the treaty apply during the provisional period? [00:08:35] Speaker 00: And the court in Hulley said, that's an issue of formation. [00:08:39] Speaker 00: That's an issue of the existence of an agreement because you have to look at whether the terms of the agreement could even apply during the period in which the provisional application of the treaty was in effect. [00:08:52] Speaker 00: the claimants there were saying we are they were contesting the fact they were saying we are within the scope of the time period in which we can invoke the treaty because that's what Russia extended in the treaty and Russia said no we have to ratify it under Russian law we have to do certain things under Russian law it would be inconsistent to submit to arbitration during that period and the court here said yeah [00:09:15] Speaker 00: it sounds in scope sure but the court here said no that is a formation issue because it goes to the point of whether you are you have the power during that time period to invoke that provision and here the question is did you invest in Russia [00:09:32] Speaker 00: as understood by the parties of the treaty. [00:09:34] Speaker 03: It seems very different from the first issue in Hulli though, because in Hulli wasn't it that Russia hadn't ratified it, the wrong person signed it, who didn't have authority. [00:09:41] Speaker 03: That really goes to whether you entered any kind of treaty. [00:09:47] Speaker 03: Whereas this is more of a factual question about whether the investor falls within the [00:09:55] Speaker 03: the treaty, which does exist, et cetera. [00:10:00] Speaker 03: It really more seems like the second issue in Hali about the first. [00:10:03] Speaker 00: Well, let me try to come at it a little bit differently, because if you have a situation where a Ukrainian investor, OK, we're investing in France, we're investing in Turkey and in Bulgaria, and they claim that some conduct by Russia affected or harmed their investment in those countries, [00:10:22] Speaker 00: It would be very plain to everyone. [00:10:24] Speaker 03: It would have nothing to do with this treaty. [00:10:26] Speaker 00: And that's what we have here. [00:10:27] Speaker 00: We have a situation where the Ukrainian investors invested in Ukraine at a time when the treaty was entered into Ukraine was understood to be Crimea was understood to be a part of Ukraine. [00:10:40] Speaker 03: But broadly speaking, though, this is a treaty that governs [00:10:44] Speaker 03: the relations between Russia and Ukraine and Russia committed to protecting the interests of Ukrainian investors in Russian territory. [00:10:54] Speaker 03: And at the time of the expropriation, it expropriated assets of Ukrainian companies in Russian territory. [00:11:02] Speaker 03: So that's why your analogy seems really inactive. [00:11:06] Speaker 00: Well, no, respectfully, I think it works because Crimea is disputed territory. [00:11:12] Speaker 00: There is no mutual understanding between the sovereigns to the treaty. [00:11:16] Speaker 03: My understanding is that Russia did not dispute in the Dalek arbitration that it was in control of Crimea at the time of these expropriations. [00:11:27] Speaker 00: But Ukraine has never agreed to the understanding under the treaty that Crimea is Russian territory. [00:11:36] Speaker 00: You can look in our joint appendix. [00:11:38] Speaker 00: We have included several diplomatic notes that were exchanged between Russia, Ukraine. [00:11:44] Speaker 03: Nobody disputes, correct, that Russia was in control of Crimea at the relevant time of these expropriations. [00:11:52] Speaker 00: But that doesn't matter. [00:11:53] Speaker 00: It's not the control, it's the legal status of the territory. [00:11:57] Speaker 03: That's your position, but that goes to the scope of the agreement. [00:12:01] Speaker 00: No, I don't think, again, it goes to the scope in the sense of an offer. [00:12:06] Speaker 00: Did the offer extend to investments made in disputed territory? [00:12:10] Speaker 00: Did the, which would be outside of the agreed to territory among the sovereigns to the treaty as to what constitutes the territory of the other. [00:12:20] Speaker 00: And just like if the Ukrainian investor [00:12:24] Speaker 00: were to invest in France, were to invest in Bulgaria. [00:12:28] Speaker 00: They couldn't invoke this treaty to enter into an arbitration agreement with Russia. [00:12:34] Speaker 00: If a tribunal purported to render an award under that theory, this court would have an obligation to review the issue de novo and to come to a conclusion as to whether the Ukrainian investor in Bulgaria can invoke [00:12:50] Speaker 00: the treaty here simply because they're a Ukrainian investor. [00:12:53] Speaker 00: And that's what we have with respect to the issue in terms of the limitations on the territorial application of this treaty here. [00:13:02] Speaker 00: And I want to get back to reading from Nextera, the language that I think is critical here. [00:13:10] Speaker 00: It's page 1102. [00:13:12] Speaker 00: We recognize that a sovereign's consent arbitration is important. [00:13:17] Speaker 00: That is especially so, whereas here, the agreement to arbitrate is the basis of a federal court's authority to exercise jurisdiction over the sovereign. [00:13:25] Speaker 00: And then it goes on to conclude in that paragraph. [00:13:28] Speaker 00: We therefore may look to the investment treaty itself to identify the scope of the sovereign's consent and the relevant agreement under the FSIA. [00:13:36] Speaker 00: And I see that I've gone into my rebuttal time so I can complete that on rebuttal. [00:14:03] Speaker 04: Good morning, Your Honors. [00:14:05] Speaker 04: May it please the court? [00:14:06] Speaker 04: I'm Marni Cheek, appearing on behalf of DTECH Criminergo. [00:14:09] Speaker 04: To avoid duplicative arguments, I will devote my time to the existence of the arbitration agreement. [00:14:16] Speaker 04: And Mr. Boykin, counsel for STABO, will focus on the New York Convention. [00:14:21] Speaker 04: And to the extent that you have questions, also the personal jurisdiction issue. [00:14:28] Speaker 04: So these appeals arise from really a straightforward arbitral award enforcement action. [00:14:34] Speaker 04: The district court's decisions that denied Russia's motions to dismiss apply the well-established case law in this circuit regarding subject matter jurisdiction under the FSIA's arbitration exception. [00:14:50] Speaker 04: With regards to the jurisdictional fact of an arbitration agreement, [00:14:57] Speaker 04: It's interesting to note that the Russian Federation has not taken you to the language of the agreement to arbitrate itself, which is article nine of the bilateral investment treaty. [00:15:11] Speaker 04: Council for Russia had been quoting Next Era, and I will as well, in that what you're looking for to the question of jurisdiction is whether sovereign entered into an agreement to arbitrate for the benefit of a class of investors. [00:15:32] Speaker 04: And if you look at the language of Article 9 of the Ukraine-Russia Bilateral Investment Treaty, [00:15:38] Speaker 04: It states that any dispute between a contracting party and an investor of another contracting party arising in connection with investments will be referred to arbitration. [00:15:50] Speaker 04: That provision doesn't have any language regarding territory at the time the treaty was entered into. [00:15:58] Speaker 04: It has none of the limitations that Russia is trying to read into the arbitration agreement. [00:16:03] Speaker 04: It is exactly like Nextera. [00:16:06] Speaker 04: It is exactly like Holley. [00:16:07] Speaker 04: It's exactly like numerous cases that have come before this court, where the agreement is for the benefit of Ukrainian investors. [00:16:17] Speaker 04: That's what's on the face of the treaty. [00:16:20] Speaker 04: That class of investors are investors of Ukraine. [00:16:24] Speaker 03: You could read Article 9. [00:16:25] Speaker 03: It says, in connection with the investments. [00:16:28] Speaker 03: So you could read Article 9 to say the investments imply the investments made at the time in the other territory. [00:16:36] Speaker 03: So I don't think that this fixes the problem. [00:16:39] Speaker 03: So that's a question that goes to scope. [00:16:41] Speaker 03: I agree with you, but what you just said is that this language takes care of it. [00:16:47] Speaker 03: I think you can read this language to say, to support Russia's argument that it says in connection with the investments, and the investments implies the investments when made. [00:16:58] Speaker 03: And at that time, they were in Ukraine. [00:17:02] Speaker 03: So I just don't think the statutory language is as strong. [00:17:05] Speaker 04: So many investment treaties, for example, the US Ecuador bilateral investment treaty that was at issue in Chevron also refers to the fact that there is an agreement to arbitrary with investors of the other contracting party with respect to an investment. [00:17:24] Speaker 04: So [00:17:26] Speaker 04: Um, I don't think that there, I, there's no, if the word is they, yes, I'm just. [00:17:33] Speaker 03: I agree with you that this is a scope issue. [00:17:36] Speaker 03: I just think that the argument that the statutory language takes care of it is not convincing to me because it says the investments. [00:17:44] Speaker 03: So because it says the investments, I think you could read this just for Russia's argument that when it says the investments, it means the investments made at the time. [00:17:54] Speaker 03: And at the time, these were Ukrainian companies investing in Ukraine. [00:17:59] Speaker 04: So how do you find out what it means to say in connection with investments? [00:18:04] Speaker 04: You look at the definition of investment under the investment treaty. [00:18:08] Speaker 04: If you look at the definition of investment in Article 1.1, it says that it's any kind of tangible or intangible assets which are invested by an investor in the territory of the other contracting party. [00:18:22] Speaker 04: Territory also is defined in this treaty, Article 1.4, [00:18:26] Speaker 04: Um, as the territory of the Russian Federation, there's no limiting language there that would address this issue of whether it doesn't say it's territory, the Russian Federation at the time. [00:18:40] Speaker 03: But I just think it's, it's arguable because at the time the territory was not Russian. [00:18:48] Speaker 03: So. [00:18:49] Speaker 03: I think the facts are that at the time that these investments were made, they weren't subject to this treaty. [00:18:56] Speaker 03: But they became subject to the treaty when Russia took over Crimea. [00:19:00] Speaker 03: And at that point, arbitral tribunals have determined that, yeah, it was subject to the treaty. [00:19:09] Speaker 03: And I think all of this goes to scope. [00:19:12] Speaker 03: So I kind of agree with you, but I don't think that [00:19:16] Speaker 03: these kind of factual and treaty-based arguments are kind of the answer because there's a timing issue. [00:19:23] Speaker 03: I think it's undisputed that at the time that the investments were made, they were not subject to the treaty, and that's Russia's point. [00:19:32] Speaker 03: But arbitrators have found that they are ultimately subject to the treaty, and I think it's a scope issue. [00:19:37] Speaker 04: So I agree that we agree that it does go to scope and that's the fundamental issue. [00:19:43] Speaker 04: It does not go to the jurisdictional question of whether there is an arbitration agreement here. [00:19:50] Speaker 04: And so I think your analysis really can stop [00:19:53] Speaker 04: based on that assessment. [00:19:58] Speaker 04: I would note also that there's tension in Russia's position. [00:20:03] Speaker 04: I think they're grabbing onto this phrase in next era, like class of investors, but that is, again, not an issue that goes to whether this arbitration agreement exists for the benefit of Ukrainian investors. [00:20:17] Speaker 04: That's not a jurisdictional fact that is being resolved here. [00:20:21] Speaker 04: As you mentioned, it goes to scope. [00:20:24] Speaker 04: So Russia's position is that if DTEK and Stable as Ukrainian investors had made an investment in Siberia, that there would be an arbitration agreement here that benefits these Ukrainian investors. [00:20:39] Speaker 04: But because Stable and DTEK made their investment in Crimea, then there is no arbitration agreement here that has been entered into on behalf of these investors. [00:20:51] Speaker 04: There's just nothing that those arguments just do not go to whether or not there is an existing arbitration agreement. [00:21:00] Speaker 04: They do not go to questions that were raised in Hoholi about whether the agreement was valid and entered into. [00:21:09] Speaker 04: They don't go to questions like in Belize over whether a government official could properly bind the state of Russia. [00:21:17] Speaker 04: Those are questions that go to the validity and existence of the arbitration agreement. [00:21:22] Speaker 04: And none of those types of questions are before you hear. [00:21:28] Speaker 04: You will recall that in Chevron, there was an argument made by Ecuador that the investments weren't part of the agreement to arbitrate and weren't covered by the standing offer to arbitrate. [00:21:43] Speaker 04: But again, this court found that that was an issue related to scope, arbitrability, not an issue related to whether an agreement exists. [00:21:58] Speaker 04: The district court in both of these cases really got it right in that they found that Russia's arguments are conflating arbitrability with whether or not there is an agreement to benefit Ukrainian investors here. [00:22:19] Speaker 04: But under this circuit's clear precedent in Next Era and Chevron, these are [00:22:27] Speaker 04: All of Russia's arguments don't go to the existence of an arbitration agreement. [00:22:33] Speaker 04: They simply go to whether these specific disputes can be arbitrated. [00:22:40] Speaker 04: And that's a question for another day. [00:22:44] Speaker 04: So with that, unless there are further questions about the arbitration agreement, I will have Mr. Boykin come to the podium. [00:22:54] Speaker 04: Thank you. [00:23:01] Speaker 02: Good morning. [00:23:06] Speaker 02: May it please the court. [00:23:08] Speaker 02: My name is James Boykin, on behalf of the Stabile Appellees. [00:23:13] Speaker 02: This appeal concerns the applicability of the arbitration exception to sovereign immunity under the Foreign Sovereign Immunities Act. [00:23:21] Speaker 02: And to trigger the applicability of that exception, this court has held a petitioner seeking to confirm an arbitration award has to establish three jurisdictional facts. [00:23:32] Speaker 02: Ms. [00:23:32] Speaker 02: Cheek has already discussed arbitration agreement and how we establish that and that the dispute concerns scope. [00:23:38] Speaker 02: I would only add to what she said, something particular from the case, which is a reference to the reference in the joint appendix is page three fifty. [00:23:48] Speaker 02: It's a paragraph from the decision of the Swiss Federal Supreme Court dated October 16th, 2018. [00:23:55] Speaker 02: in which the Swiss Federal Supreme Court wrote in paragraph 4.3.2, quote, the appellant Russian Federation does not deny before the Federal Supreme Court that territories that are de facto controlled by a contracting state are also included in the territorial scope of the 1998 Investment Protection Agreement. [00:24:19] Speaker 02: The main argument that I'm here is Mr. Cheek said I would make. [00:24:22] Speaker 03: Does that mean that Russia in that arbitration proceeding agreed that there was an arbitration agreement with the investor? [00:24:34] Speaker 03: Like the opposite positions taking before us at that point in time before the Swiss federal Supreme Court. [00:24:40] Speaker 02: That's what the court found that the Russian Federation did not deny. [00:24:43] Speaker 02: That de facto control by a contracting state also included. [00:24:50] Speaker 02: in the territorial scope of the bit. [00:24:52] Speaker 02: That the bit's definition of territory included areas under its de facto control within its scope. [00:24:59] Speaker 02: So this just simply emphasizes, well, it makes two points. [00:25:03] Speaker 02: That your analysis about scope is the critical issue, but it also raises a stopple point that over there, they didn't dispute that it was within the territorial scope. [00:25:14] Speaker 02: They have come here today solely for purposes of. [00:25:17] Speaker 03: But you didn't make an estoppel argument. [00:25:20] Speaker 03: either before or before the district courts rely on that. [00:25:24] Speaker 02: No, because we found the law so clear on that this was scope. [00:25:27] Speaker 02: We didn't feel the need to make an estoppel point. [00:25:29] Speaker 02: It was just simply sitting here listening today that I was reminded of that paragraph and thought I would draw your attention to it. [00:25:35] Speaker 02: Thank you. [00:25:37] Speaker 02: So with the third jurisdictional fact that we had to establish was that there is a treaty, quote, potentially governing award enforcement. [00:25:47] Speaker 02: Now, the words potentially governing are important. [00:25:53] Speaker 02: They come from this court's decision in next era v Spain, and they're derived from the text of the FSAA's arbitration exception, which grants subject matter jurisdiction over an action to confirm an award made pursuant to an agreement to arbitrate that [00:26:11] Speaker 02: is or may be governed by a treaty or other international agreement enforced for the United States calling for the recognition and enforcement of arbitral awards. [00:26:21] Speaker 02: Now, in both briefs below, the Russian Federation has said that the treaty must [00:26:28] Speaker 02: enforcement. [00:26:30] Speaker 02: But that's not what this court's jurisprudence said, and that's not what the statute requires. [00:26:33] Speaker 02: We just need to show that there is a treaty that potentially governs enforcement, and we have done that when we pointed to the New York Convention. [00:26:45] Speaker 02: And this court's jurisprudence is replete with cases in which [00:26:49] Speaker 02: awards in favor of claimants against sovereign states have been considered to be recognized and enforced under the New York Convention. [00:27:01] Speaker 02: The answer that the Russians come up with is that this case is sui generis because it involves a political award. [00:27:09] Speaker 02: And I'm not sure exactly what that is, but I know that the awards in this case are not political awards. [00:27:17] Speaker 03: They are awards for maybe both commercial and political. [00:27:20] Speaker 02: No. [00:27:21] Speaker 02: If we look at the Russian's authorities, such as the restatement, it refers in the discussion of political wards to wards between sovereign states. [00:27:29] Speaker 02: Oh, I see. [00:27:30] Speaker 02: So an example of political ward might be arbitral wards rendered under the Arbitration Commission established by the Treaty of Washington in 1871 that resolved the dispute between Great Britain and the United States about Great Britain's liability for actions it took during the American Civil War. [00:27:49] Speaker 02: Those would be political wards. [00:27:51] Speaker 02: This and the Swiss Federal Supreme Court also considered this argument and found that it was plainly a commercial award. [00:28:03] Speaker 03: It has to be either commercial or political. [00:28:05] Speaker 03: There are no other choices. [00:28:08] Speaker 02: Well, in the Alabama arbitrations, the United States was awarded a sum of money. [00:28:14] Speaker 02: So you could look at that award of a sum of money as commercial. [00:28:19] Speaker 02: But the larger context in which it took place was resolving a political dispute. [00:28:24] Speaker 02: So that would make it a political award. [00:28:26] Speaker 02: I would say that bilateral investment treaties. [00:28:29] Speaker 03: Is there any other category besides political or commercial? [00:28:32] Speaker 02: But this this concept of political awards comes from because there could be an award between private parties. [00:28:39] Speaker 03: It's not commercial. [00:28:40] Speaker 03: It could be, I don't know, defamation. [00:28:43] Speaker 03: I'm just saying that that's right. [00:28:45] Speaker 03: There are other other types of awards that are. [00:28:50] Speaker 02: But in this case, the question is just whether it's commercial. [00:28:55] Speaker 02: There may be. [00:28:56] Speaker 02: And it wasn't for us to define the contours, the outer contours of what is a political award. [00:29:02] Speaker 02: It would, again, I think, go to scope. [00:29:04] Speaker 02: Because to the extent that the tribunals, in either case below, may have transgressed over the line into [00:29:11] Speaker 02: issuing a decision on a political question, which we vigorously dispute they did. [00:29:15] Speaker 03: They didn't. [00:29:16] Speaker 03: I mean, didn't they specifically say, we have no comment about that? [00:29:19] Speaker 03: That's exactly what they said. [00:29:20] Speaker 03: All they're saying is, it's undisputed that Russia controls these territories. [00:29:24] Speaker 03: That's exactly correct. [00:29:27] Speaker 02: And the Swiss federal Supreme Court in the Seville case reviewed that and said, absolutely, they didn't transgress that line. [00:29:35] Speaker 02: But my point was simply going to be that even if there was a quantum of doubt that they might have, that constitutes a defense under the New York Convention, that the arbitrators acted outside the excess of their authority. [00:29:46] Speaker 02: So in this sense, every question sort of goes back to scope. [00:29:51] Speaker 02: And it is not as if the Russian Federation won't have a chance to raise this argument before the district court, which it did not. [00:29:59] Speaker 03: So I don't see this aspect of the case is going to scope. [00:30:03] Speaker 03: I see Russia arguing that regardless of the scope, the New York convention requires it to be about or related to commerce and, or potentially related to commerce. [00:30:16] Speaker 03: And their argument is, which I don't agree with, but their argument is. [00:30:22] Speaker 03: In their view, this whole dispute turns upon a territorial determination because their position is at the time that. [00:30:35] Speaker 03: the treaty was entered or at the time that these investments were made, it was all in Ukraine. [00:30:40] Speaker 03: And so to them, there had to be an implicit finding in the arbitration that this was no longer Ukraine. [00:30:47] Speaker 03: It had become Russia. [00:30:49] Speaker 03: And that's not a commercial question. [00:30:50] Speaker 03: But I think that that is kind of foreclosed by the fact that these are obviously commercial investments. [00:30:58] Speaker 03: They were [00:30:59] Speaker 03: These are companies investing to make profits, et cetera. [00:31:02] Speaker 03: It is sufficiently commercial to fall under the New York Convention. [00:31:06] Speaker 03: But I don't think that's a scope of arbitration issue. [00:31:08] Speaker 03: OK. [00:31:09] Speaker 02: And I agree with you that these are obviously commercial awards because they were rendered under Article IX of the bid, not Article II. [00:31:14] Speaker 03: But I think that's their argument. [00:31:16] Speaker 02: Yeah. [00:31:16] Speaker 02: And I would simply just go back to the extent [00:31:21] Speaker 02: You know, we only had to show we think we've shown as the district court held that the New York Convention does apply, but all we had to do for purposes of the arbitration exception is show that it potentially applied and we've more than satisfied that burden in both cases. [00:31:34] Speaker 05: And with that respect, because the convention contemplates that the contact contracting states would have enforcement ability within any of those states. [00:31:45] Speaker 05: Do we need to reach that agreement? [00:31:47] Speaker 05: I mean, reach that issue. [00:31:49] Speaker 02: No. [00:31:51] Speaker 02: For purposes of the immunity exception, you need only find that both petitioners, the petitioners have established their burden of production with respect to the three jurisdictional facts under the Chevron Next Era jurisprudence. [00:32:05] Speaker 02: You don't need to get into the territory question at all. [00:32:08] Speaker 03: Um and I would conclude on that with respect except with personal jurisdiction or I think that we have to address this because I think Russia is saying that the treaty doesn't govern the award because it's not a commercial transaction. [00:32:22] Speaker 03: So we have to address that. [00:32:24] Speaker 03: Well, I think that even potentially, uh you can look this was addressed by the court of no, I'm just saying I think we when we write our opinion, we have to address this argument that this is not a part of [00:32:37] Speaker 03: that the newer convention doesn't govern this award because for Russia, it's not potentially a commercial transaction. [00:32:44] Speaker 03: We have to address that. [00:32:46] Speaker 02: But if you feel that way and have to address it, I'd refer you to JA 370. [00:32:50] Speaker 02: And this is from paragraph 4.2 of the 2019 decision of the Swiss Federal Supreme Court, in which they address this very issue about whether it was a commercial decision. [00:33:01] Speaker 02: And they say, contrary to what the appellant appears to be presuming, the matter in dispute in the arbitration was not the status of Crimea in relation to the 1988 Biodateral Investment Treaty or its status under international law. [00:33:19] Speaker 02: But rather, the claim brought forward by the appellant for compensation in an amount of USD 47 million plus interest as a consequence of the alleged expropriation of their investments. [00:33:29] Speaker 02: So that at the court of the seat of the arbitration, this issue was raised that this was a political ward or a ward governing the status of premia. [00:33:38] Speaker 02: Swiss Federal Supreme Court said no, it wasn't. [00:33:42] Speaker 02: So if you do feel you need to address it, there's factual support in the record for that proposition. [00:33:49] Speaker 02: But I would come back to just say. [00:33:51] Speaker 03: I think your time is expired. [00:33:53] Speaker 02: OK. [00:33:53] Speaker 02: Oh, I'm minus 42. [00:33:55] Speaker 02: And I will sit down. [00:33:57] Speaker 02: And unless the court wants to hear personal jurisdiction, we'll just rest on our briefs and add to the recent case, Deutsche Telekom v. India, which adopted the reasoning that was before in our briefs. [00:34:08] Speaker 02: And thank you for indulging me. [00:34:10] Speaker ?: Thank you. [00:34:17] Speaker 05: Thank you. [00:34:17] Speaker 05: You have your seven minutes. [00:34:19] Speaker 00: Thank you. [00:34:23] Speaker 00: So I'd like to begin with the text of the treaty, because I think that that is what Nextera says we should look at when we're trying to determine the consent of the sovereign to arbitrate. [00:34:34] Speaker 00: And Judge Payne, I understand your view on whether it's scope or not, but I think you're right to have some doubt about the language in the treaty. [00:34:44] Speaker 00: Because when we look at the treaty itself, the definition of investor of another contracting party [00:34:52] Speaker 00: which is Article 1. [00:34:55] Speaker 00: also refers to making investments on the territory of the other. [00:35:00] Speaker 00: Investments, contracting party, and territory, these are all essential ingredients in the terms of the offer, which establishes who may accept it. [00:35:10] Speaker 00: This idea that any Ukrainian investor can invoke this treaty no matter where they invested, it does not conform to how investment treaties work. [00:35:19] Speaker 00: The whole purpose of an investment treaty is to protect foreign investments. [00:35:24] Speaker 00: There are several diplomatic notes that we have included in the joint appendix, and I would point you to one in particular at J.A. [00:35:32] Speaker 00: 248 and 249 of the DTAC joint appendix. [00:35:38] Speaker 00: which is a diplomatic note that the Russian Federation sent to Ukraine to try to come to a common understanding of what the status of Crimea was under the treaty. [00:35:49] Speaker 00: And Ukraine did not agree to the position that it had become Russian territory. [00:35:54] Speaker 00: Instead, it just opted to terminate the treaty. [00:35:58] Speaker 00: And when more evidence of this kind of mutual understanding that is required to amend the treaty in terms of its territorial scope, it's also evidenced by the series of other diplomatic notes that we've included between Russia and other countries like Canada, the UK, [00:36:15] Speaker 00: in France where Russia invited those countries to recognize that [00:36:31] Speaker 00: And consistently, all those other nations rejected that invitation and said, we don't agree that you can unilaterally amend the territorial scope of the treaties. [00:36:42] Speaker 00: And we don't accept that Crimea is part of Russia. [00:36:46] Speaker 03: So these all seem to be arguments you could have made to the arbitral tribunals. [00:36:52] Speaker 03: That's fine. [00:36:53] Speaker 03: But the only question before us is whether there was a treaty. [00:37:00] Speaker 03: well, basically whether there was an arbitral agreement. [00:37:03] Speaker 03: And it just seems to me that all your arguments go kind of to the merits of whether or not you should have to pay, et cetera. [00:37:14] Speaker 03: And that was all resolved in the arbitral tribunals. [00:37:18] Speaker 03: But we just have these jurisdictional facts. [00:37:23] Speaker 03: And one is the existence of an arbitration agreement. [00:37:28] Speaker 03: It exists. [00:37:29] Speaker 03: It's just whether or not you're just talking about whether or not these particular Ukrainian companies fall within it. [00:37:35] Speaker 00: Well, a couple of points on that. [00:37:37] Speaker 00: First, it's just not the existence of an agreement. [00:37:39] Speaker 00: It has to be a relevant agreement, just like in the Al-Waleed case in the Fifth Circuit, where the petitioners in that case came in with an agreement that was not between the parties. [00:37:48] Speaker 00: And the court said, you have an award rendered against the defendant here purportedly under that agreement, but that's not an agreement that [00:37:57] Speaker 00: was validly existing between the parties there. [00:38:00] Speaker 00: And so they dismissed the action under the FSIA. [00:38:02] Speaker 00: The same thing happened in the first investment case, also in the Fifth Circuit. [00:38:06] Speaker 03: It seems to me that this is really sort of a temporal issue. [00:38:10] Speaker 03: You're arguing that the treaty only applies to people who would have been covered at the time of the investment, whereas [00:38:18] Speaker 03: There's also the argument to be made that what matters is the time of the expropriation. [00:38:23] Speaker 03: And you would agree that at the time of the expropriation, Russia was in control of Crimea and it took assets of Ukrainian companies, right? [00:38:31] Speaker 03: So the facts are the facts. [00:38:32] Speaker 03: And it's just as a question about at what point in time we look at this. [00:38:37] Speaker 03: And that's a question for the arbitral tribunal. [00:38:39] Speaker 03: And then also it goes to the scope of whether or not the Ukrainians fall within the treaty. [00:38:43] Speaker 03: No, respectfully, honor, it is not, because- And you agree that at the time of the expropriation, Russia was in control of Crimea? [00:38:52] Speaker 00: Russia was in control de facto, is what the tribunal determined. [00:38:56] Speaker 00: But that is not a question that disposes of the issue of whether the sovereigns that were party to the treaty had a mutual understanding of what their territorial boundaries were. [00:39:07] Speaker 03: If there was a dispute about what the territorial boundaries- If, let's take the temporal part of this aside. [00:39:13] Speaker 03: say is everything as we know it to be that Russia was in control of Crimea. [00:39:19] Speaker 03: If the Ukrainian companies invested at that time with Russia already in control, would that fall under the treaty? [00:39:25] Speaker 00: If there was a mutual understanding between Ukraine and Russia that Crimea is sovereign territory of Russia and the treaty was amended to correspond with that change, that external change. [00:39:38] Speaker 03: That's a different hypothetical. [00:39:39] Speaker 03: I'm asking you if [00:39:41] Speaker 03: Russia was in control of Crimea at the time of the investments and then the Ukrainians invested in Crimea. [00:39:49] Speaker 03: Would that fall into the treaty? [00:39:50] Speaker 00: No, because it's disputed territory. [00:39:52] Speaker 00: And that's important because, again, a petitioner can't come into court waiving any kind of agreement and say, I have an award rendered pursuant to that agreement. [00:40:04] Speaker 03: So what it says in the treaty is the investments of investors of either contracted party made on the territory of the other. [00:40:11] Speaker 03: So it's just on the territory of the other. [00:40:13] Speaker 03: It doesn't go into these very specific things that you think have to happen. [00:40:18] Speaker 03: And if Russia's controlling it, it's their territory. [00:40:21] Speaker 00: But that is a determination that would have to be made in a dispute between the sovereigns. [00:40:25] Speaker 00: The treaty includes Article 10, which allows for disputes between the state parties to the treaty over the application and interpretation of the treaty. [00:40:34] Speaker 00: If there is a disagreement, which there is here, between the sovereign states as to what the territory is, [00:40:39] Speaker 00: That would be an award for a state to state arbitration under Article 10, and that would clearly be a geopolitical determination in a resolution of a dispute, which is a boundary dispute. [00:40:50] Speaker 00: And that is what we're talking about here. [00:40:51] Speaker 00: We can't have a unilateral amendment or revision of the treaty by one party that does not recognize the applicability of the treaty at the time. [00:41:03] Speaker 00: So we don't believe that we have here a situation where the investors that invested in Crimea were considered to be members of the class, which has to be defined as a jurisdictional matter under Nextera by this court. [00:41:18] Speaker 00: This court has to define what is the class of investors that are covered. [00:41:22] Speaker 00: And if the class of investors does not include investors of Ukraine in disputed territory, there is no jurisdiction here. [00:41:29] Speaker 00: Thank you, Your Honors.