LLC Komstroy, as successor in interest to LLC Energoalliance v. Republic of Moldova

At a glance

Parties

LLC Komstroy (Ukraine), as successor in interest to LLC Energoalliance, v. Republic of Moldova

Case no.

U.S. District Court, District of Columbia, No. 14-cv-01921 (CRC)

Court

U.S. District Court for the District of Columbia (Judge Christopher R. Cooper)

Underlying award(s)

Final award of October 2013 by an ad hoc tribunal seated in Paris, under the Energy Charter Treaty and the UNCITRAL Arbitration Rules (the president of the tribunal dissented on jurisdiction)

Forum and rules

Petition to confirm under the New York Convention, as implemented by Chapter 2 of the Federal Arbitration Act; jurisdiction over Moldova under the FSIA arbitration exception

Treaty

Energy Charter Treaty

Sector

Electricity supply

Outcome

The Court lifted its stay (13 November 2018), then denied Moldova's renewed motion to dismiss and confirmed the award (23 August 2019).

Amount

Award: MLD 592,880,395 (MLD 195,547,212 for the lost investment plus interest) and USD 540,000 (USD 200,000 attorneys' fees, USD 340,000 arbitration costs), about USD 46.5 million in total. The Court converted the award to US dollars at the exchange rate on the award date (MLD 12.9207 per USD) and added compound prejudgment interest at the prime rate and postjudgment interest under 28 U.S.C. § 1961. Each side bears its own costs in the US proceeding.

The dispute

Energoalliance, a Ukrainian company, supplied Ukrainian electricity to Moldtranselectro, Moldova's state-owned utility, under contracts from 1999 and 2000. Payments passed through Derimen, a British Virgin Islands entity, which in May 2000 assigned the unpaid debt to Energoalliance. Moldova obstructed collection: it moved the utility's assets to a new state company while leaving its debts behind, and a 2002 auditing-chamber ruling ordered those debts cancelled. A majority of an ad hoc UNCITRAL tribunal in Paris found that the debt was an "investment" under the Energy Charter Treaty and that Moldova had breached the treaty, and it awarded damages. Energoalliance's successor, Komstroy, petitioned the court in Washington, D.C. to confirm the award. Moldova raised sovereign immunity, forum non conveniens, the lack of finality caused by the French set-aside proceedings, and defences under Article V(1)(b) (inability to present its case) and Article V(1)(c) (excess of the tribunal's authority) of the New York Convention.

Key holdings

1. Stay lifted. Moldova had not sought a stay of the French exequatur, so under French law the award was enforceable despite the pending set-aside proceedings. The Europcar factors favoured going ahead: the long delay, the slow pace of the French proceedings, the Court of Cassation's rejection of the jurisdictional ground, and the fact that Moldova had started the set-aside action. 2018 Opinion, pp. 5–9
2. The FSIA arbitration exception applies. Producing the ECT and the notices of arbitration was a prima facie showing of an agreement to arbitrate. Moldova's arguments on arbitrability and on finality go to the merits of enforcement, not to the Court's jurisdiction. 2019 Opinion, pp. 9–13
3. Under D.C. Circuit precedent, forum non conveniens does not apply to actions to enforce arbitral awards against foreign States. 2019 Opinion, p. 13
4. No Article V(1)(b) defence. Moldova showed no actual prejudice from three alleged defects: the treatment of its expert opinion, the missing full audio recordings of the hearing, and the claimant's allegedly new post-hearing arguments. Those arguments only elaborated earlier positions. Moldova also waived the objection by not raising it before the tribunal. 2019 Opinion, pp. 14–20
5. No Article V(1)(c) defence. By incorporating the UNCITRAL Rules, the ECT shows clear and unmistakable consent to let the tribunal decide arbitrability, so its finding that an investment existed receives substantial deference. Moldova's objections about the "business transaction" concept, Moldtranselectro and the retroactive application of Agreement No. 24/02 sought substantive review of the award, which the Convention does not allow. 2019 Opinion, pp. 20–28
6. Remedies. The Moldovan lei portion is converted to US dollars at the rate on the award date (the breach-day rule). Prejudgment interest runs, compounded, at the average daily prime rate; postjudgment interest runs under 28 U.S.C. § 1961. Fees are refused because Moldova did not act in bad faith. 2019 Opinion, pp. 28–32

Procedural history

1. July 2010Energoalliance began ad hoc UNCITRAL arbitration under the ECT. Notices of arbitration were sent on 8 July 2010 and 18 August 2010.
2. October 2013Final award in Paris. The 2018 opinion dates it 23 October 2013; the 2019 opinion gives 25 October 2013.
3. November 2013Moldova applied to the Paris Court of Appeal to set the award aside (25 November 2013 according to the 2018 opinion; the 2019 opinion says November 2014). In June 2014 the High Court of Paris granted an exequatur.
4. 14 November 2014Petition to confirm the award filed in the U.S. District Court for the District of Columbia.
5. 12 April 2016The Paris Court of Appeal set the award aside for lack of jurisdiction. The District Court stayed its case on 22 April 2016.
6. March 2018The Cour de Cassation reversed the Paris Court of Appeal and sent the case back to a differently composed panel.
7. 13 November 2018Opinion and Order: stay lifted; Moldova's motion to extend the stay denied.
8. 23 August 2019Memorandum Opinion: renewed motion to dismiss denied and petition to confirm the award granted.

Tribunal, counsel and experts

Decided by

• Christopher R. Cooper Judge, U.S. District Court for the District of Columbia

For the claimant

Viacheslav Lych · Benoit LeBars

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Keywords

• Komstroy
• Energoalliance
• Energy Charter Treaty
• New York Convention
• enforcement
• FSIA arbitration exception
• stay pending set-aside
• Europcar factors
• exequatur
• Article V(1)(b)
• Article V(1)(c)
• arbitrability
• definition of investment
• electricity supply
• Moldtranselectro
• forum non conveniens
• currency conversion
• prejudgment interest

Summary generated with AI from the published documents — refer to the award for the authoritative text.