Background

On July 21, 2017, a tribunal constituted under the ICSID Convention issued an award ordering Argentina to pay three Spanish investment companies more than $320 million as compensation for the expropriation of their investments in two Argentine airlines. On May 29, 2019, an ICSID annulment committee denied Argentina’s application to annul the award. The Spanish investors later assigned the award to Titan Consortium 1, LLC.

On August 24, 2021 (more than four years after the award was issued), Titan filed an action under 22 U.S.C. § 1650a to enforce the award in D.C. federal district court. Section 1650a creates a federal cause of action for the enforcement of ICSID awards but lacks a statute of limitations. Argentina moved to dismiss, arguing that ICSID award enforcement actions filed in the United States should be subject to the same three-year limitations period applicable to the enforcement of international arbitral awards under the New York Convention. Judge Jia Cobb held that Titan’s suit was timely, finding that the most analogous state-law statute of limitations for the federal ICSID statute to borrow was the 12-year limitations period from D.C. Code Section 15-101, a D.C. law that applies to the enforcement of money judgments rendered by federal and local courts within the District of Columbia. Argentina appealed.

The D.C. Circuit’s Decision

The D.C. Circuit affirmed Judge Cobb’s holding that the 12-year statute of limitations in D.C. Code Section 15-101 applies to the enforcement of ICSID awards under Section 1650a. The court explained that when a federal statute does not include a limitations period, “the default rule is to turn to state law to find the most closely analogous statute of limitations.” Slip op. at 9 (cleaned up). While there is no cause of action under D.C. local law for the enforcement of ICSID awards, Section 1650a itself suggests borrowing a limitations period from a statute governing the enforcement of state court judgments, because it mandates that “[t]he pecuniary obligations imposed by” an ICSID award “shall be enforced and shall be given the same full faith and credit as if the award were a final judgment of a court of general jurisdiction of one of the several States.” 22 U.S.C. § 1650a(a) (emphasis added). See id. at 9-11. D.C. Code Section 15-101 “fits that bill” because it establishes a limitations period for the enforcement of money judgments issued by local and federal courts within the District of Columbia. Id. at 11.

The D.C. Circuit explained that two other considerations support borrowing the limitations period from D.C. Section 15-101. First, the “full faith and credit” language in Section 1650a was adopted from the Full Faith and Credit Act, 28 U.S.C. § 1738, which governs the enforcement of state court judgments in federal court. Id. That act “point[s] . . . towards a state statute governing the enforcement of judgments,” id., because it “requires federal courts to ‘afford the same full faith and credit to state court judgments that would apply in the State’s own courts,’” Valores Mundiales, S.L. v. Bolivarian Republic of Venezuela, 87 F.4th 510, 518-19 (D.C. Cir. 2023) (quoting Kremer v. Chem. Constr. Corp., 456 U.S. 461, 463 (1982)). Second, although the “full faith and credit” obligation is generally considered to apply only to out-of-state judgments, the D.C. Circuit noted that when a D.C. federal district court enforces a D.C. local court judgment pursuant to the terms of Section 15-101, it is “affording [the] D.C. judgment full faith and credit.” Slip op. at 14 (citing Carr v. District of Columbia, 646 F.2d 599, 602 (D.C. Cir. 1980), and Hurd v. District of Columbia, 864 F.3d 671, 679 (D.C. Cir. 2017)).

The D.C. Circuit rejected Argentina’s proposal to borrow the three-year limitations period from Section 207 of the Federal Arbitration Act (“FAA”) which applies to award enforcement under the New York Convention, for three reasons in addition to the “strong thumb on the scale” in favor of applying a state law analogue. Slip op. at 9-10. First, Section 1650a explicitly provides that the FAA “shall not apply to the enforcement of [ICSID] awards.” Id. at 17. Second, Section 207 permits a district court to refuse to enforce an award on any of the procedural and substantive grounds set out in Article V of the New York Convention, a type of review that is forbidden under Section 1650a. Id. at 18. Third, the legislative history of Section 1650a and the drafting history of the ICSID Convention confirm that the drafters considered and rejected application of substantive defenses to confirmation of the type available under the New York Convention in ICSID award enforcement actions. Id. at 18-19.

Key Takeaways

In holding that actions to enforce ICSID arbitration awards in Washington D.C. are subject to a 12-year statute of limitations, Titan confirms the attractiveness of the D.C. federal district court as a venue for the enforcement of ICSID awards. An ICSID award-creditor now can rest assured that its right to enforce its award in the United States will not expire during the pendency of the ICSID annulment committee review process, which can take several years. While there is a plausible argument that, under the ICSID Convention, no statute of limitations at all should apply, the 12-year limitations period now applicable in Washington, D.C. leaves award-creditors and potential investors with ample time to commence an enforcement action in Washington, D.C.

Mr. McGill is lead counsel to Titan Consortium 1, LLP in the case discussed in this client alert.