Summary

REPLY BRIEF FOR PETITIONER

INTRODUCTION

Like the petition in Kingdom of Spain v. Blasket Renewable Investments, LLC (No. 24-1130), for which this Court has called for the views of the Solicitor General, this petition involves a circuit split that lies at the heart of the arbitration exception to sovereign immunity under the Foreign Sovereign Immunities Act (FSIA). The D.C. Circuit has departed from the Second and Fifth Circuits by failing to require courts to determine, as a jurisdictional matter, whether an agreement to arbitrate any differences "between the parties" was made. 28 U.S.C. 1605(a)(6). This fundamental question of contract formation has been improperly relegated to the merits stage by the D.C. Circuit, exposing foreign states to the indignity and burdens of merits litigation unnecessarily.

Notably, the respondents do not contest that this Court would benefit from granting this petition if it grants the petition in Blasket, a clear concession that reviewing both petitions together would be the optimal vehicle for answering the question presented.

Rather, they downplay the significance of the circuit split by attempting to draw a distinction between private contracts and investment treaties, as did the respondents in Blasket. That argument is unsupported by the text of the arbitration exception.

By its terms, the exception requires an agreement to arbitrate differences "between the parties," that is, between the foreign state and the parties invoking the purported arbitration agreement. There is no principled reason to apply the "between the parties" requirement differently in investment treaty cases.

The language "with or for the benefit of" does not signal a difference between private contracts and investment treaties. If there is no agreement "with or for the benefit of" the specific parties invoking the arbitration clause in a treaty, there can be no agreement to arbitrate any differences "between the parties" within the meaning of the arbitration exception. The parties whose differences are being submitted to arbitration are the foreign state and the specific investors, not the state parties to the treaty.

By treating the existence of an arbitration agreement "between the parties" as a merits question, the D.C. Circuit (unlike the Second and Fifth Circuits) allowed the respondents to bypass Russia's sovereign immunity simply by pointing to the existence of an arbitration clause, regardless of whether Russia ever consented to submit any differences between it and these specific respondents to arbitration at all. Given the District of Columbia's status as the default venue for actions against foreign states under the FSIA, no further percolation of this issue can be expected.

This Court's review is urgently needed.