Ballantine et al v Dominican Republic - United States District Court for the District of Columbia - Action No 2019-3598 - Memorandum Opinion by Judge Timothy J Kelly - 11 August 2020
Lisa and Michael Ballantine initiated arbitration against the Dominican Republic to resolve an investment dispute. The arbitration panel found that it lacked jurisdiction over the Ballantines' claims under the Dominican Republic-Central America Free Trade Agreement and issued an award in favor of the Dominican Republic. The Ballantines moved for this Court to vacate the award under the Federal Arbitration Act (FAA), 9 U.S.C. § 10. But the FAA requires that notice of a vacatur motion be served within three months of the award's delivery, 9 U.S.C. § 12, and the Ballantines failed to complete service under the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. § 1608(a), until several weeks after the FAA deadline lapsed. The Ballantines argue that they served timely notice on the Dominican Republic and that satisfying the FSIA's service requirements within three months is both unnecessary and nearly impossible. For the reasons explained below, the Court disagrees, and will deny the Ballantines' motion as untimely.
The Ballantines failed to timely serve their Motion to Vacate the Award. Section 12 of the FAA requires that notice of a motion to vacate "must be served upon the adverse party" within three months of filing or delivery, 9 U.S.C. § 12. And for nonresidents of the district where the arbitration occurred, like the Dominican Republic here, see Award at 179, notice "shall be served by the marshal of any district within which the adverse party may be found in like manner as other process of the court." 9 U.S.C. § 12.
These requirements, courts have recognized, present tricky issues for serving foreign parties. "[F]oreign parties," such as the Dominican Republic, "will not necessarily be found in any district" of the United States, InterCarbon Bermuda, Ltd. v. Caltex Trading & Transp. Corp., 146 F.R.D. 64, 67 (S.D.N.Y. 1993), and service by marshals is "an artifact" of an "era that ended in the early 1980s," Technologists, Inc. v. MIR's Ltd., 725 F. Supp. 2d 120, 126 (D.D.C. 2010). What is left is the requirement that service be "in like manner as other process of the court," 9 U.S.C. § 12--which courts have interpreted to mean that service on foreign parties should be "in accordance with Rule 4." Technologists, Inc., 725 F. Supp. 2d at 126. And Rule 4, in turn, states that a "foreign state . . . must be served in accordance with [the FSIA's] 28 U.S.C. § 1608." Fed. R. Civ. P. 4(j)(1); see Transaero, Inc. v. La Fuerza Aerea Boliviana, 30 F.3d 148, 154 (D.C. Cir. 1994) ("[S]ection 1608(a) sets forth the exclusive procedures for service on a foreign state." (cleaned up)). Thus, the FAA required that the Ballantines serve notice of their
Motion to Vacate on the Dominican Republic under the FSIA within three months of the Award's filing or delivery: by December 3, 2019, see MTV at 15; Opp. at 9. The FSIA "sets out in hierarchical order . . . four methods by which `[s]ervice ... [must] be made.'" Republic of Sudan v. Harrison, 139 S. Ct. 1048, 1054 (2019) (quoting 28 U.S.C. § 1608(a)). The third method, applicable here, calls for:
sending a copy of the summons and complaint and a notice of suit, together with a translation of each into the official language of the foreign state, by any form of mail requiring a signed receipt, to be addressed and dispatched by the clerk of the court to the head of the ministry of foreign affairs of the foreign state concerned.
28 U.S.C. § 1608(a)(3).3 The Ballantines made three attempts to serve notice on the Dominican Republic on the last day of the FAA's three-month window, December 3, 2019: they emailed the Motion to the head of the Ministry of Industry and Commerce, see Moore Decl. ¶ 12; they sent the Motion to the Dominican Republic's arbitration counsel, A&P, see ECF No. 1-17; and they directed a Dominican bailiff to try to provide a copy of the Motion to the Ministry of Industry and Commerce, although he did not succeed, see ECF No. 13-8.
The Ballantines did not achieve timely service through any of these efforts. First, they directed none of these attempts to "the head of the ministry of foreign affairs" of the Dominican Republic, and none were "dispatched by the clerk of the court," as required. 28 U.S.C. § 1608(a)(3). Second, as for sending the Motion to A&P, notice of a vacatur motion may be served upon the "adverse party['s] attorney" only if "the adverse party is a resident of the district within which the award was made." 9 U.S.C. § 12. But the Dominican Republic is a nonresident, see Award at 179, so this provision is inapplicable.4 Third, while the FSIA requires that "a copy of the summons" be served, 28 U.S.C. § 1608(a)(3), the Ballantines only requested summonses a week after the December 3, 2019, service deadline. See ECF No. 3. In fact, the Ballantines failed to request foreign mailing by the Clerk under the FSIA until January 8, 2020, over a month after the FAA's three-month service deadline. See ECF Nos. 56. Neither of the Ballantines' arguments solve their service problem. They argue that their efforts above provided the Dominican Republic with actual notice of their Motion on December 3, 2019, which they maintain is all that 9 U.S.C. § 12 requires. See Reply at 21. But that reading would eviscerate the FAA's language in Section 12 that service be "in like manner as other process of the court," 9 U.S.C. § 12, which--when applied to service on a foreign sovereign like the Dominican Republic--refers to the process outlined in Rule 4 and, in turn, the FSIA.5 See Technologists, Inc., 725 F. Supp. 2d at 126; Grupo Unidos Por El Canal, S.A. v. Autoridad del Canal de Panama, No. 17-cv-23996, 2018 WL 3059649, at *4 (S.D. Fla. June 20, 2018)
("[A]ctual notice of a motion to vacate does not translate to proper service under the FAA and FSIA . . . .").
The Ballantines also appear to call for equitable tolling of the FAA service deadline because, according to them, construing 9 U.S.C. § 12 to require FSIA service within three months would "effectively make it impossible" for parties to file timely motions to vacate arbitration awards for foreign entities. See Reply at 20, 2324. And to be sure, serving a foreign sovereign can be cumbersome, see Reply at 2325, and it is not at all clear that Congress contemplated the difficulties in completing FSIA service in such a short time frame, see Republic of Argentina, 715 F. Supp. 2d at 120 n.10. Still, the D.C. Circuit rejected a similar argument in Argentine Republic v. National Grid PLC, 637 F.3d 365 (D.C. Cir. 2011) (per curiam). In that case, the plaintiff "argued that it would be impossible to complete service of notice within the [FAA's] three month period" because the defendant was headquartered abroad and the FSIA required using government channels to serve under the Hague Convention. Id. at 367. The court found that Federal Rule of Civil Procedure 6(b) cannot be used to extend the three-month service window because 9 U.S.C. § 12 sets a "strict deadline," and "it would be incongruous to allow courts to circumvent the congressional directive" with "common law . . . exceptions." Id. at 368 (quoting Dalal, 541 F. Supp. 2d at 76).6 So it does not appear that equitable tolling is available to the Ballantines here.
Finally, even if the Court had the power to equitably toll the service deadline, on the record here such tolling would be inappropriate, since the obstacles cited by the Ballantines were not the reason they missed the deadline. They moved to vacate on the last day of the service window, failed to request summonses until after the deadline, and did not even try to complete FSIA service by requesting foreign mailing until about a month later. See ECF Nos. 1, 56. As a result, they cannot show that they pursued their rights diligently or that "extraordinary circumstances" prevented them from timely serving the Dominican Republic. BCB Holdings Ltd. v. Gov't of Belize, 110 F. Supp. 3d 233, 245 (D.D.C. 2015), aff'd, 650 F. App'x 17 (D.C. Cir. 2016).7