The Second Circuit recently affirmed a lower court’s decision to vacate its earlier judgment enforcing a Malaysian-based arbitration award against the government of Laos where a Malaysian court subsequently set aside the award. After a dispute between a Thai company and its Laotian subsidiary (“TLL”) against the Laotian government over mining contracts, an arbitration panel in Malaysia found Laos in breach and awarded TLL $57 million. Once the period for challenging the award under Malaysian law passed, TLL pursued enforcement actions against Laos in the U.S., U.K., and France. In late 2010, nine months after the operative deadline, Laos moved for an extension of time to challenge the award, which the Malaysian court granted. While a U.S. district court issued relief enforcing the award in 2011, the Malaysian court then set aside the award in 2012. The present appeal arose from the district court’s 2014 decision granting Laos’ Rule 60(b)(5) motion to vacate its previous confirmation order to give effect to the Malaysian court’s set-aside judgment and two subsequent orders.
First, the court held that Rule 60(b)(5) applies to motions to vacate judgments confirming arbitral awards that are subsequently set aside by the primary jurisdiction. Reviewing the New York Convention and FAA texts, it found the Convention’s requirement of enforcing arbitral awards in accordance with the secondary jurisdiction’s procedural rules includes post-judgment procedures like Rule 60(b). Further, the FAA provision subjecting judgments to the “provisions of law relating to” judgments in an action extends to the Federal Rules of Civil Procedure.
Next, the court discussed what a district court’s Rule 60(b)(5) analysis should entail in this context. It found that a district court should take into consideration the Convention’s concern for international comity as well as the “full range of Rule 60(b) considerations.” In the present case, the Second Circuit concluded that the lower court did not exceed its discretion in applying Rule 60(b)(5). The lower court did not explicitly lay out its Rule 60(b) analysis, but the appellate court reviewed the record and found all the circumstances potentially influencing the Rule 60(b) motion did not bar the district court from vacating its prior judgment. The Second Circuit observed that throughout the proceedings the lower court explicitly considered the interests of justice, appropriately declined to find Laos acted inequitably, and the interests of finality did not weigh against the lower court’s decision. The court concluded that had the lower court expressly reviewed the relevant conduct in context of Laos’s Rule 60(b)(5) motion, it would not have enforced the annulled award.
Finally, the Second Circuit found no abuse of discretion in two other district court decisions rejecting TLL’s request for a security bond and refusing to enforce the English judgment. It noted the English judgment’s strong connection (and reliance upon) the district court’s original confirmation award which had since been vacated and rejected TLL’s other arguments on that order.