Tethyan Copper Company Pty Limited v Pakistan United States District Court for the District of Columbia 1-19-CV-02424 - Memorandum Opinion - 10 March 2022
Since 1966, Congress has required federal courts to grant full faith and credit to arbitral awards from the International Centre for Settlement of Investment Disputes (ICSID). See 22 U.S.C. § 1650a(a). This case involves the intersection of that mandate with the standards for waiver of sovereign immunity by foreign states.
In 2019, ICSID issued a $6 billion award against the Government of Pakistan. The award arose out of a long dispute between Pakistan and Tethyan Copper Company, an Australian mining company. Tethyan had submitted the dispute to ICSID arbitration according to the terms of a bilateral investment treaty signed in 1998 between Pakistan and Australia. Pakistan argued that ICSID did not have jurisdiction over the dispute. A tribunal disagreed and issued its award against Pakistan. Tethyan then petitioned this Court to recognize and enforce the award.
Pakistan essentially appealed the award at ICSID, seeking a wholesale annulment of the award or a modification of it. Those actions triggered automatic provisional stays of enforcement, all of which the Court applied to these proceedings. But those stays have all expired. Now, two years after Tethyan filed its petition--and over a decade after Tethyan commenced arbitration--Pakistan asks the Court to stay proceedings or, in the alternative, to dismiss the petition entirely. Because Pakistan has not shown its entitlement to a stay and D.C. Circuit precedent demands deference to arbitrability determinations by ICSID, the Court will deny both requests.
Pakistan next argues that the Court should deny full faith and credit because the Tribunal's $6 billion award violates due process. See Mot. at 37-40.
The Court disagrees. Due process constrains awards of only punitive damages, not compensatory ones. See State Farm Mut. Auto Ins. Co. v. Campbell, 538 U.S. 408, 416 (2003).
Pakistan suggests that the Award is "so large as to be akin to a punitive damages award." Reply at 30. Not so. The Tribunal fashioned a figure to quantify "the market value" of Tethyan's investment had Pakistan not expropriated that investment. Award ¶ 273. That figure included the "future profits" of the investment absent expropriation. Id. ¶ 335. Repayment of market value and future profits "redress[ed] the concrete loss [Tethyan] has suffered" from Pakistan's conduct, a hallmark of compensatory damages. Campbell, 538 U.S. at 416 (cleaned up).
Nowhere did the Tribunal say that the $6 billion was "aimed at deterrence or retribution," the "broader function" of punitive damages. Id. And Pakistan offers no authority imposing due process constraints on compensatory damages. Thus, due process does not limit the type of damages awarded here.
The Court will give the Award full faith and credit as required by 22 U.S.C. § 1650a(a).
For these reasons, the Court will deny Pakistan's motion to stay or dismiss Tethyan's Petition. The Award is final and Pakistan is "obliged to abide by and comply with" it. ICSID Convention art. 53(1). The Court likewise must "enforce the pecuniary obligations imposed by" the Award. Id. art. 54(1); see also 22 U.S.C. § 1650a(a). A separate Order will issue today.