Summary

Opinion for the court filed by Senior Circuit Judge RANDOLPH.
Dissenting opinion filed by Circuit Judge WALKER.

RANDOLPH, Senior Circuit Judge:

Venezuela US, S.R.L. ("VUS"), a Caribbean company based in Barbados, obtained an award of damages against the Bolivarian Republic of Venezuela ("Venezuela") in an international arbitration conducted pursuant to the Arbitration Rules of the United Nations Commission on International Trade Law. This is an appeal from the judgment of the district court granting VUS's petition for recognition and enforcement of that award.

The United States, as a member of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, agreed that our courts would recognize and enforce foreign arbitral awards pursuant to the Convention done at New York June 10, 1958; T.I.A.S. No. 6997 (Dec. 29, 1970). Congress codified the New York Convention in the Federal Arbitration Act. See 9 U.S.C. §§ 201-08. The Federal Arbitration Act requires a domestic court to confirm a foreign arbitral award "unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the [New York Convention]." Id. 9 U.S.C. § 207. One such ground is the so-called "public policy exception" in Article V(2)(b), which permits the competent authority of a member country to refuse recognition when "[t]he recognition or enforcement of the award would be contrary to the public policy of that country."

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This is our response to the dissent.

In the district court and in our court Venezuela invoked one, and only one, New York Convention "public policy" objection to enforcement of the arbitration award. Venezuela's objection, which we reject for reasons already given, was that enforcement would violate United States "public policy" concerning the President's constitutional authority to recognize foreign governments.

The dissenting opinion goes off on a tangent of its own devising. It contends that we must decide an entirely different "public policy" question, a question neither Venezuela nor VUS ever raised or argued or subjected to evidentiary development in pleadings or proceedings in the district court or on appeal in our court.

The question the dissent chooses to answer is whether a United States "public policy" bears on a foreign nation's representation in an international arbitration conducted in the Netherlands.

Counsel for Venezuela could hardly be faulted for failing to advance such a theory in federal court. The proverbial man on the street, if asked whether the United States had any such "public policy," would furrow his brow, mutter "surely not," and walk away--more quickly still when the interviewer mentioned "Franz Bonaventura Adalbert Maria Herzog von Bayern."

The fallacies in the dissent's analysis are more than a few. Here are some.

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Walker, Circuit Judge, dissenting:

On the western side of Munich sits Schloss Nymphenberg, a palace wider than Versailles. Built in 1675, it served for centuries as the summer home for the House of Wittelsbach, rulers of Bavaria until the end of the first World War. Now, for ten euros, you can take a tour.

Franz Bonaventura Adalbert Maria Herzog von Bayern lives in a side wing of the palace. He is the ninety-two-year-old great-grandson of the last king of Bavaria, Ludwig III. A former prisoner of the Nazis, today von Bayern is renowned as a collector and connoisseur of modern art.

Von Bayern is also, in what he calls a "charming historical curiosity," heir to the throne of England and Scotland.1 Or at least he would be, if William and Mary had not deposed James II in the "Glorious Revolution" of 1688, and if the Act of Settlement had not deposed James's Catholic heirs in 1701.

Imagine -- far-fetched though it may be this side of Culloden -- that von Bayern were to enter an appearance as the sovereign representative of the United Kingdom in a $100- million international arbitration. And imagine he were then to replace the U.K.'s lawyer with one of his choosing before losing the suit.

In that arbitration, was the U.K. heard in a meaningful sense? Was von Bayern a proper representative of the U.K.? Did the U.K. enjoy the right to counsel of its choosing? Would a U.S. court's recognition of the award evince respect for the sovereignty of the United Kingdom? Would it respect the President's authority to recognize (as he of course does) that the House of Windsor is the U.K.'s sovereign government, not the House of Wittelsbach? If the answer is "no, no, a thousand times no," would recognition and enforcement of the arbitral award accord with our nation's basic notions of justice?

Swap Venezuela for the United Kingdom, the National Assembly for the House of Windsor, and Nicolás Maduro for Franz von Bayern, and you get something pretty close to the international arbitration at issue today. Venezuela was represented in that arbitration by a man, Nicolás Maduro, whom the United States did not recognize as the president of Venezuela when the arbitral tribunal ordered Venezuela to pay an opposing party $100 million. And then the district court for the District of Columbia recognized that award under the New York Convention.

That was error. Under the New York Convention, and in accordance with hundreds of years of international judgment- recognition practice, U.S. courts need not recognize and enforce a foreign arbitral award when doing so would offend our nation's "public policy."

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Footnotes omitted