[00:00:00] Speaker 06:
Case number 23-7031, Nexter Energy Civil Holdings BV and Nexter Energy Spain Holdings BV versus Kingdom of Spain Appellant.

[00:00:10] Speaker 06:
And case number 23-7032, Nyren Holding SARL versus Kingdom of Spain Appellant.

[00:00:17] Speaker 06:
Ms.

[00:00:17] Speaker 06:
Harris for the Appellant Kingdom of Spain.

[00:00:19] Speaker 06:
Ms.

[00:00:20] Speaker 06:
Pei, I mean Ms.

[00:00:21] Speaker 06:
Curia for the European Commission.

[00:00:23] Speaker 06:
Ms.

[00:00:23] Speaker 06:
Ringo, I make it Gary I for the United States of America.

[00:00:27] Speaker 06:
Mr. Dwarski for the Apple East next year, energy global holdings at L and nine Rand folding as a RL.

[00:00:35] Speaker 01:
Good morning, Ms.

[00:00:36] Speaker 01:
Harris.

[00:00:37] Speaker 01:
Good morning.

[00:00:38] Speaker 09:
Thank you.

[00:00:39] Speaker 09:
And may it please the court, Sarah Harris for the kingdom of Spain, the foreign sovereign immunities act bars restriction over Spain.

[00:00:47] Speaker 09:
First, the arbitration exception doesn't apply.

[00:00:51] Speaker 09:
That exception requires federal courts to confirm for themselves that an arbitration agreement exists.

[00:00:58] Speaker 09:
None exists here.

[00:01:00] Speaker 09:
EU law is paramount international law for EU members like Spain and EU nationals like the investors.

[00:01:08] Speaker 09:
EU law has always deprived EU members of any power to agree to resolve intra-EU disputes outside the EU system, including through arbitration.

[00:01:19] Speaker 09:
Second, the waiver exception doesn't apply.

[00:01:22] Speaker 09:
Foreign sovereigns don't implicitly waive their immunity just by ratifying arbitration treaties.

[00:01:28] Speaker 09:
Foreign sovereigns must also agree to arbitrate with particular parties.

[00:01:33] Speaker 09:
And third, the investor's position will upend settled international law

[00:01:38] Speaker 09:
and make the U.S.

[00:01:39] Speaker 09:
a haven pursuits that investors home countries forbid.

[00:01:43] Speaker 09:
The settled rule is that when the EU itself ratifies a treaty, as here, the EU controls intra-EU relations and that treaty doesn't supplant EU law.

[00:01:56] Speaker 04:
Ms.

[00:01:56] Speaker 04:
Harris, you mentioned that the EU and the member states ratified the treaty and under

[00:02:04] Speaker 04:
The Foreign Sovereign Immunities Act, we look not only to whether the nation state has, under the arbitration exception, whether the nation state has agreed with that counterparty, but whether it's entered an agreement for the benefit of other parties.

[00:02:22] Speaker 04:
And here, I take it you don't dispute that the EU and Spain entered into an agreement for the benefit of the investors.

[00:02:32] Speaker 09:
We dispute that the relevant agreement, I guess, is the Energy Charter Treaty.

[00:02:37] Speaker 09:
So we think that the agreement here is a very specific one, to the extent one exists at all.

[00:02:43] Speaker 09:
It would be between Spain and the individual investors.

[00:02:46] Speaker 04:
What do we make of it?

[00:02:46] Speaker 04:
I mean, we're interpreting the Foreign Sovereignty Act, and for the purpose of this question, the arbitration exception.

[00:02:53] Speaker 04:
Is your position that the parties

[00:03:00] Speaker 04:
than who have to submit their disputes to arbitration, have to be the same parties who entered the agreement for the benefit of others?

[00:03:08] Speaker 09:
Our position is there's only one arbitration agreement here because the Energy Charter Treaty itself seems to recognize that.

[00:03:14] Speaker 04:
Well, the BG group and the Chief Justice as well talk about the relationship between two agreements, an agreement to settle disputes by arbitration that could be the treaty and

[00:03:27] Speaker 04:
the agreement creating a standing offer for investors?

[00:03:32] Speaker 09:
That's true.

[00:03:33] Speaker 09:
But I think the relevant precedents here would be the later Supreme Court decision in ZF Automotive, which discusses the type of investment treaty we have here, as well as the Olin decision from the Second Circuit, which is surveying this, and looking at the Energy Charter Treaty itself.

[00:03:50] Speaker 09:
So if you look at Article 26.5 in particular, I don't think you can construe sort of whatever

[00:03:56] Speaker 09:
background is going on with member states or not as the relevant arbitration agreement.

[00:04:01] Speaker 09:
Because Article 26.5 recognizes that to have the type of arbitration agreement required under both ICCID and the New York Convention, you need both consent given by the sovereign together with the written consent of the investor.

[00:04:17] Speaker 09:
And those two things together are what would satisfy the requirements under ICCID and the New York Convention.

[00:04:22] Speaker 08:
So why does the ECT not satisfy that test?

[00:04:25] Speaker 09:
These look here.

[00:04:26] Speaker 09:
We don't think that there is any.

[00:04:28] Speaker 09:
Spain does not have the power to agree to arbitrate with these investors from European countries, and so the missing ingredient here is the consent given by state Spain in the words of the European Court of Justice, but the ECB contains an unconditional agreement to arbitrate and sign that.

[00:04:47] Speaker 08:
And we have held in at least two cases Chevron and still it's that.

[00:04:52] Speaker 08:
this type of agreement in a treaty married with a request for the arbitration consistent with what the treaty requires is sufficient to confer jurisdiction, at least on a prima facie level.

[00:05:06] Speaker 09:
So two issues with that.

[00:05:07] Speaker 09:
First of all, I think there's a preliminary question, which is what law governs whether Spain actually consented in the energy charter treaty or not.

[00:05:16] Speaker 09:
And given that this is a dispute between an EU member

[00:05:20] Speaker 09:
and EU parties, the primary law governing their relationship is and always has been EU law.

[00:05:26] Speaker 08:
I guess the question is, why is not your position just a question of arbitrability as opposed to a question about jurisdictional facts?

[00:05:36] Speaker 08:
Because it seems that if we're just looking at jurisdictional facts,

[00:05:39] Speaker 08:
We have precedents addressing the ECT specifically in Stoics and a similar agreement in Chevron, which said that while you need to show is a treaty like this and a request to arbitrate from the investor and an arbitral award, we have that here.

[00:05:58] Speaker 08:
And if you have other arguments as to why this doesn't apply, why isn't that just a question of arbitrability, which is not about jurisdiction?

[00:06:06] Speaker 09:
Two reasons, and first of all, is this court's other precedents, which seem to clearly establish that whether a party has the power to agree to arbitrate is a question of whether an agreement is formed, which is always for this court to decide de novo under the Foreign Sovereign Immunities Act.

[00:06:22] Speaker 04:
Which precedents are you principally relying on?

[00:06:24] Speaker 04:
Both.

[00:06:25] Speaker 04:
The FAA precedents?

[00:06:26] Speaker 09:
No, I'm particularly relying in the Foreign Sovereign Immunities context on Belize and Mykula, but I also can talk about FAA cases because those also confirm the point.

[00:06:36] Speaker 09:
And just to walk through the Belize decision, if it were true that all you had to do is take a quick look at whether there is an investment treaty, whether there is a purported agreement, that case would be inexplicable because this court said, no, there has to be a further look at whether Belize's prime minister actually had the authority to agree to arbitrage.

[00:06:58] Speaker 08:
Can I ask you a question?

[00:07:00] Speaker 08:
It seems to me that you've conceded

[00:07:01] Speaker 08:
that the language in the ECT and the ECT itself does create an agreement to arbitrate with non-EU signatories to the ECT.

[00:07:10] Speaker 08:
Is that correct?

[00:07:10] Speaker 09:
That is correct.

[00:07:11] Speaker 09:
And that is no diff, but we don't think that that means it's necessarily a question of arbitrability.

[00:07:16] Speaker 08:
No, well, I guess my question is, it's the exact same language that creates an agreement to arbitrate with non-EU countries.

[00:07:24] Speaker 08:
And there's no carve out in the ECT for intra-EU disputes.

[00:07:29] Speaker 08:
So it's the exact same language.

[00:07:30] Speaker 08:
It does create an agreement for non-EU countries, but it does not.

[00:07:34] Speaker 08:
For intra-EU countries, it's the same language.

[00:07:36] Speaker 09:
So two points on that.

[00:07:37] Speaker 09:
I just, first of all, if you're looking at the ECC itself, we disagree with that reading because, and I would first point you to Article 1.3 of the ECT, which expressly recognizes that economic integration organizations like the EU

[00:07:51] Speaker 09:
have primacy and control relations between EU members.

[00:07:55] Speaker 09:
And that provision says that- I'm sorry, what was the number of that again?

[00:07:59] Speaker 09:
13, Article 13.

[00:08:03] Speaker 09:
And it says that an organization constituted by states to which they have transferred competence, i.e.

[00:08:10] Speaker 09:
sovereignty, over certain matters, a number of which are governed by this treaty, including the authority to take decisions binding on them with respect to those matters.

[00:08:19] Speaker 04:
Is your position any different from what it would be had all the current members of the EU been members and the EU only on its own behalf had joined the ECT?

[00:08:34] Speaker 09:
I don't think so.

[00:08:35] Speaker 09:
The reason why the EU joins alongside members is usually there are issues of sort of shared competence in a treaty.

[00:08:42] Speaker 09:
And this one, again, is an express recognition that the EU is going to have primacy in certain regards.

[00:08:48] Speaker 04:
So it's not... So your answer to my question was that your position is the same as it would be if the individual member states

[00:08:55] Speaker 04:
had not joined, but only the ECT had joined.

[00:08:58] Speaker 04:
Only the EU.

[00:08:59] Speaker 04:
I'm sorry, only the EU.

[00:09:01] Speaker 09:
Thank you.

[00:09:03] Speaker 09:
Yes, and the reason is when the EU joins a treaty, it's demarcating with respect to individual members that there are matters within the exclusive competence of the European Union between the members.

[00:09:14] Speaker 09:
That is how 28 signatories unanimously understand the energy charter treaty.

[00:09:19] Speaker 09:
That is how signatories across the world understand other treaties like the World Trade Agreement in 1995.

[00:09:26] Speaker 04:
You mentioned the Belize case, but Belize case doesn't really get you out of the questions I think that Judge Pan and I were asking where you have a background treaty that under which the parties have agreed to

[00:09:42] Speaker 04:
to arbitrate with respect to third parties, that was just a bilateral situation.

[00:09:48] Speaker 04:
You're talking about the competence of the chain.

[00:09:51] Speaker 09:
Sure.

[00:09:51] Speaker 09:
And two responses on that.

[00:09:52] Speaker 09:
Nicula, I think, is very squarely on all fours, albeit an unpublished decision.

[00:09:56] Speaker 09:
But this court is saying in Nicula that it is a jurisdictional question whether the bar on intra-EU arbitration

[00:10:03] Speaker 09:
precluded Romania from entering into an agreement.

[00:10:06] Speaker 09:
And just more broadly, the idea that there is a distinction between bilateral treaties and an international agreement respectfully puts the cart before the horse.

[00:10:14] Speaker 09:
The question in the first instance is, did Spain, could Spain, consent to take

[00:10:20] Speaker 09:
certain types of disputes outside the EU system, did the parties to the Energy Charter Treaty understand that Spain and any other EU members were doing this?

[00:10:29] Speaker 09:
And any way you look at it, under any sort of choice of law principle, either because you agree that when EU members and nationals are doing anything, the primary law governing their relationship is EU law, or because under the Energy Charter Treaty itself,

[00:10:45] Speaker 09:
the EU joining Article 13, the other principles in Article 266 recognize that EU law has a significant role to play and cannot allow.

[00:10:54] Speaker 08:
So shouldn't the EU and Spain just withdraw from the ECT if that's the case?

[00:10:59] Speaker 08:
Because they have signed an agreement that unconditionally agrees to arbitrate and now they're saying we can't sign that agreement.

[00:11:06] Speaker 08:
It seems

[00:11:07] Speaker 08:
The EU and Spain are still benefiting from the ECT.

[00:11:10] Speaker 08:
Their nationals can arbitrate against non-EU countries and have all of these benefits, but they're saying that they don't have to sort of pay the price.

[00:11:19] Speaker 08:
And it seems to me that if they have a problem and there's a conflict between the ECT and EU law, then they need to resolve it themselves, not through coming to court like this, but just withdrawing from the ECT, which in no uncertain terms says is an unconditional agreement to arbitrate.

[00:11:35] Speaker 09:
But respectfully, that would contravene the way every signatory to the ECT that has ever waiting on this issue understands the treaty.

[00:11:42] Speaker 09:
So it will be really strange to force signatories just to withdraw.

[00:11:46] Speaker 08:
What do you mean?

[00:11:47] Speaker 08:
What do you think everybody's agreeing to?

[00:11:48] Speaker 08:
Because I think there's a dispute here as to whether

[00:11:51] Speaker 09:
There is certainly a dispute with the investors, but among signatories to the Energy Charter Treaty, 28 of them, and no one has said otherwise, everyone interprets that treaty to mean that Spain and other EU members never agreed to arbitrate in the EU system.

[00:12:06] Speaker 09:
And that's not a surprise given the backdrop of the treaty.

[00:12:09] Speaker 09:
The idea of even having intra-EU arbitration was unheard of until the mid-2000s.

[00:12:14] Speaker 09:
And whenever it cropped up, when it started cropping up then, the European Court of Justice immediately made clear in the Ireland decision.

[00:12:22] Speaker 08:
I want to go back to what you said before, because we have an amicus brief from international scholars.

[00:12:29] Speaker 08:
And they note that when the ECT was being negotiated and drafted,

[00:12:36] Speaker 08:
There was a suggestion that we have a disconnection clause, which is something that would carve out intra-EU disputes.

[00:12:44] Speaker 08:
And they chose not to do that.

[00:12:45] Speaker 08:
It was actually considered and not done.

[00:12:48] Speaker 08:
But the EU did carve out this Svalbard treaty concerning an archipelago in the Arctic.

[00:12:54] Speaker 08:
But you never carved out intra-EU

[00:12:57] Speaker 08:
Disputes and the plain language of the ECT says they are unconditionally agreeing to arbitrate these disputes even among the European countries.

[00:13:06] Speaker 08:
And what you pointed to me before Article one three is just a definition section.

[00:13:11] Speaker 08:
It's not a disconnection clause.

[00:13:12] Speaker 09:
So a few responses.

[00:13:14] Speaker 09:
First of all, the EU offered the disconnection clause only if necessary, and it is superfluous because when the EU itself joins a treaty, the EU is making the treaty part of EU law.

[00:13:24] Speaker 09:
Now, Article 13, of course, is a definitional section, but it's still highly significant.

[00:13:29] Speaker 09:
that the definition of the EU is as an organization to which states transfer competence and that the EU can take binding decisions with respect to matters within the treaty.

[00:13:40] Speaker 09:
So it is defining what the EU does, but it's saying that matters governed by the treaty are subject to the EU's competence, including the power to take those decisions.

[00:13:53] Speaker 09:
It brings a lot into this definition.

[00:13:55] Speaker 08:
Well, I don't say that I'm looking at it right now.

[00:13:57] Speaker 09:
Respectfully, I don't have to just rely on Article one three.

[00:14:00] Speaker 09:
I am also relying on the significance of the EU joining a treaty.

[00:14:03] Speaker 09:
This is no different from the WTO agreement from 1995.

[00:14:09] Speaker 09:
There also was a disconnection clause proposed for that treaty.

[00:14:12] Speaker 09:
No one has understood the idea that you propose a disconnection as only if

[00:14:17] Speaker 09:
if relevant, to mean that the EU somehow lacks the authority to make EU law on this and on the Spalbard issue.

[00:14:23] Speaker 08:
I'm sorry.

[00:14:24] Speaker 08:
So are you saying that at the time that they drafted the ECT, everybody understood that it would not apply to intra-EU disputes?

[00:14:30] Speaker 09:
Yes, I am absolutely saying that.

[00:14:32] Speaker 09:
And not only am I saying that, that is evident from the signatories' understanding of this treaty.

[00:14:37] Speaker 09:
But Acmea and Comstroy had not been decided yet.

[00:14:40] Speaker 09:
Yes, but Acmea and Comstroy are applying settled principles that date to 1957 in the EU system.

[00:14:46] Speaker 09:
It is not just the case that these were principles that were only discovered in 2018 or later.

[00:14:51] Speaker 09:
They are principles that have undergirded the entire EU system since its formation.

[00:14:55] Speaker 09:
Article 344 of the Treaty on the Functioning of the EU sets out in very plain language that member states who join the EU no longer can refer disputes outside the European system if they are intra-EU disputes.

[00:15:09] Speaker 09:
It is not allowed to do so.

[00:15:11] Speaker 04:
What if Switzerland and the United States had a treaty

[00:15:16] Speaker 04:
that predated the ECT and that incorporated sort of First Options versus Kaplan, you know, your idea about verifying the existence in advance of the validity of the arbitration agreement.

[00:15:36] Speaker 04:
in advance.

[00:15:37] Speaker 04:
And then they claimed that the ECT, even though they're signatories and exit, even though they're signatories, are subject to a different jurisdictional inquiry than the inquiry that one would ordinarily make in an exit case applying the ECT.

[00:15:55] Speaker 04:
That's also internationalized, is it not?

[00:15:57] Speaker 09:
So that would be international law.

[00:15:59] Speaker 09:
I think the question is, we're all in the same world, I think, of deciding which conflict principles apply.

[00:16:05] Speaker 09:
And we have three options that have been on the table from both sides, both of which we win.

[00:16:10] Speaker 09:
The first of which is that European law is the primary law governing relations between EU members.

[00:16:18] Speaker 09:
That's what everyone expects, investors, nationals, members alike.

[00:16:22] Speaker 09:
Second of all is the general principle that the specific governs the general.

[00:16:26] Speaker 09:
The EU treaties are themselves international law and are the most specific rules governing the capacity or power of EU membership that general laws more specific than the ECT that contains an explicit.

[00:16:39] Speaker 08:
agreement and consent to arbitrate?

[00:16:41] Speaker 08:
How is that more specific than the ECT?

[00:16:43] Speaker 09:
Because the ECT is silent with respect to power to agree to things and not only is the ECT, again, the ECT itself is internally conflicting but does not have a rule saying, you know, this is the rule for capacity or power to.

[00:16:56] Speaker 09:
Does your position boil down to Spain signed the ECT

[00:17:00] Speaker 08:
believing it could agree to this unconditional arbitration agreement, but they were wrong.

[00:17:05] Speaker 08:
They weren't able to sign that.

[00:17:07] Speaker 09:
Absolutely not.

[00:17:08] Speaker 09:
What we are saying is Spain and everyone else, again, all 28 signatories who have weighed in unanimously saying this, that when an EU member such as Spain or anyone else signs the EC2, especially when you have the EU joining, what it is agreeing to is arbitrating with non-EU members.

[00:17:26] Speaker 09:
And so that is what is agreed to.

[00:17:29] Speaker 08:
It is not that you just say that in the treaty, then, because it says the complete opposite in the plain words of the treaty.

[00:17:34] Speaker 08:
Respectfully, it's every signatory.

[00:17:37] Speaker 08:
where every contracting party is agreeing to an unconditional arbitration.

[00:17:42] Speaker 09:
And you could say the same thing for the UN Convention on the Law of the Sea and the WTO agreements.

[00:17:46] Speaker 09:
And the understanding at the time is that when the EU itself joins a treaty alongside members, there is no power to sort of say, oh, we thought that this meant to supersede primary EU law that governs these relationships.

[00:17:59] Speaker 09:
It is clear to everyone.

[00:18:00] Speaker 09:
And again, I can't emphasize enough how

[00:18:03] Speaker 09:
unusual it be for a court to sort of say that all signatories who have weighed in just got this totally wrong.

[00:18:12] Speaker 09:
They have been operating under this understanding.

[00:18:13] Speaker 08:
Your position relies on this sort of fiction that at the time they assumed they knew what Comstroy and Acmea were going to decide.

[00:18:22] Speaker 09:
So respectfully, no, it doesn't rely on that fiction.

[00:18:24] Speaker 09:
It relies on the understanding that when the EU members formed the European Union in 1957 and agreed to a provision,

[00:18:33] Speaker 09:
that put off limits any sort of dispute resolution that did not let the European Court of Justice have primary decision-making responsibility, that was not allowed.

[00:18:42] Speaker 09:
They gave up that power.

[00:18:43] Speaker 03:
And let me ask you a question about arbitration, because that's what we're focusing on here.

[00:18:53] Speaker 03:
When the EU signed the ETC, it knew that arbitration was different than litigation.

[00:19:03] Speaker 03:
so that parties could agree to arbitrate a matter where they would reach an agreement through the arbitration process.

[00:19:14] Speaker 03:
That would not be appealable, would be bound by it, but they had a choice of going that route or litigating.

[00:19:22] Speaker 03:
So why do we read this treaty in a manner that assumes that the EU did not know

[00:19:33] Speaker 03:
what commercial arbitration was.

[00:19:37] Speaker 09:
Respectfully, I don't think it's a matter of reading the treaty as if the EU doesn't understand arbitration.

[00:19:43] Speaker 03:
Well, what did it mean by arbitration, commercial arbitration then, in the understanding that one of the reasons post World War II arbitration was so desirable was you could avoid the costs and delay

[00:20:02] Speaker 03:
of litigation, and surely the EU and its leaders were sophisticated enough to realize that.

[00:20:11] Speaker 03:
All I'm getting at is if it joins a treaty where it embraces the understanding of a term in a commercial field, how can it come back years later and say, oh, that's not what we meant?

[00:20:27] Speaker 03:
I'm just trying to understand where your argument goes.

[00:20:31] Speaker 03:
Yes.

[00:20:32] Speaker 03:
And our argument is that arbitration, commercial arbitration at least, among parties was not a matter that came through the court system or the legislative system on an individual basis.

[00:20:52] Speaker 09:
And what the EU agreed to and what the member states agreed to is arbitration vis-a-vis non-EU members.

[00:21:00] Speaker 09:
It sort of begs the question, who are they agreeing with?

[00:21:03] Speaker 09:
It's sort of as if states could try.

[00:21:05] Speaker 03:
Well, they are a sophisticated party.

[00:21:07] Speaker 03:
They know who they're agreeing with.

[00:21:10] Speaker 03:
They know they're agreeing with sovereigns who are part of the EU, not only an agreement as to

[00:21:21] Speaker 03:
countries that are not part of the EU.

[00:21:24] Speaker 03:
I mean, you're asking us to assume, and you may be correct, but I just want to be clear about it, that there was either a bit of naivety or ignorance on the part of the EU when it agreed by signing a treaty that enabled independent commercial arbitration.

[00:21:49] Speaker 09:
So respectfully, I think this is like the UN Convention on the Law of the Sea, where it is not naivety or lack of sophistication going on.

[00:21:57] Speaker 09:
It is the understanding that when the EU itself joins a treaty, it is taking intra-EU matters off the table.

[00:22:04] Speaker 09:
So the agreement is absolutely between the EU members and people outside the EU.

[00:22:09] Speaker 09:
But there is no agreement to arbitrate things within EU members

[00:22:16] Speaker 03:
So when Judge Pillard asked you what authorities you were relying on, you gave her two cases from our court, and you dismissed the Supreme Court BG authority.

[00:22:29] Speaker 03:
And of course, we can go through those cases and point out how they're factually different.

[00:22:34] Speaker 03:
That's why I thought Judge Penn's question about trying to understand what's going on when the EU signs

[00:22:43] Speaker 03:
A treaty that calls for commercial arbitration as an option.

[00:22:50] Speaker 09:
Yes, and what goes on, and again, this is the way that treaties have been understood, similar treaties.

[00:22:56] Speaker 09:
And so it would really upend the way these treaties have been read by all the signatories to say, suddenly, this is not the case.

[00:23:02] Speaker 09:
But when the EU signs a treaty, it is fencing off inter-EU relations.

[00:23:07] Speaker 09:
And that's not just sort of me saying it.

[00:23:09] Speaker 08:
It's also the European Court of Justice repeatedly saying this, including why did all the individual members of the EU separately sign the treaty?

[00:23:16] Speaker 08:
If only the EU had signed it, your position would make a lot more sense.

[00:23:20] Speaker 09:
The reason is, and I think, again, Article one three recognizes that some of the matters in the treaty are exclusive competence of the European Union.

[00:23:28] Speaker 09:
Others at the time were not.

[00:23:30] Speaker 09:
And so that is the practice of the European Union.

[00:23:32] Speaker 09:
If there are sort of shared matters, the EU signs and also the individual members.

[00:23:37] Speaker 09:
But the key thing is that you signing and recognizing that with respect to external matters, that is what happened.

[00:23:43] Speaker 09:
And that

[00:23:43] Speaker 04:
You talk about throughout your briefing and your argument that the implications of Comstra and may are that Spain lacks the capacity, but that is not how those decisions read.

[00:24:01] Speaker 04:
Comstroy talks about, as a matter of EU law, the ECT's arbitration provision has to be interpreted as not being applicable to disputes between a member state and an investor of another member state.

[00:24:12] Speaker 04:
It goes more to whether Spain did enter an agreement as opposed to whether it could.

[00:24:17] Speaker 04:
And so is there anything you can point me to in those decisions, the EU Court of Justice decisions that point to this capacity argument?

[00:24:31] Speaker 09:
Yes.

[00:24:33] Speaker 09:
First of all, when Comstray says that the ECT arbitration provision cannot apply to intra-EU arbitration, it is saying that that lacks force between EU members.

[00:24:44] Speaker 09:
It's not just sort of, it doesn't apply means it doesn't exist.

[00:24:48] Speaker 09:
And I think the European Foodist decision from the European Court of Justice makes this super clear.

[00:24:53] Speaker 09:
It's going over those cases and saying that

[00:24:55] Speaker 09:
The consent, quote, lacks force, which is sort of the typical language you would expect if it was a lack of power, lack of authority argument of the type this court has.

[00:25:04] Speaker 04:
It can be that it's invalid, which is, you know, and I understand and appreciate why you're using the capacity arguments.

[00:25:11] Speaker 04:
I think that's your strongest footing in a very tough battle against exit.

[00:25:17] Speaker 04:
And we haven't even talked about the full faith and credit.

[00:25:20] Speaker 04:
aspect of exit.

[00:25:21] Speaker 04:
But so the logic underlying the position is that an international tribunal or an arbitral tribunal can't interpret EU law because it's not part of the EU judicial system, but fundamentally

[00:25:37] Speaker 04:
I don't understand what the threat is to the EU judicial system and the EU court's primacy in a kind of a Mari versus Madison sense as interpreters of EU law because arbitration awards are not presidential.

[00:25:53] Speaker 04:
So you end up with, I mean, is your position that parties, private parties can't settle energy disputes?

[00:26:00] Speaker 04:
within the EU or private and state parties can't settle disputes based on a misapprehension of EU law?

[00:26:09] Speaker 09:
Our position is what the European Court of Justice said in Comstrait and in previous cases and why this is part of one of the foundational treaties on the EU, which is that the EU members and their nationals really are getting together and so that the European Court of Justice can actually develop this body of law

[00:26:26] Speaker 09:
dispute resolution mechanisms that are outside of that, that do not respect the premise of EU law, undermine the system that is being built in the EU.

[00:26:35] Speaker 09:
They leave, even when it's an arbitral decision where you sort of say it's just an award, you can decide whether or not to enforce it.

[00:26:42] Speaker 09:
Those are extremely important interpretive questions of treaties that the members of the EU agreed, at least in matters among them, would be subject to the European Court of Justice.

[00:26:52] Speaker 09:
And that's- What about settlement?

[00:26:53] Speaker 09:
settlement, uh, with respect to you have to, I suppose, have a dispute brought somewhere in the outset and nine run and next era decide to settle this case.

[00:27:03] Speaker 04:
And they have ideas in their own minds about you long, what it means.

[00:27:10] Speaker 04:
And they just settle and they don't publish anything.

[00:27:13] Speaker 04:
They talk among themselves.

[00:27:15] Speaker 04:
They are

[00:27:16] Speaker 04:
interpreting EU law.

[00:27:18] Speaker 04:
It sounds like your position is requiring everybody to litigate, which is, as Judge Rogers was asking, there are some benefits to having some disputes arbitrated.

[00:27:29] Speaker 04:
So you're saying, no, they cannot be arbitrated, period?

[00:27:33] Speaker 09:
And I'm saying, within EU members, it's not just me saying that.

[00:27:35] Speaker 09:
That is the European Court of Justice's longstanding position from 2006, when it said the UN Convention on the Law of the Sea, which is also a multilateral treaty,

[00:27:46] Speaker 09:
You have two EU members who try to invoke the arbitration provision there.

[00:27:50] Speaker 09:
The Court of Justice says, no, that is taking disputes outside the system.

[00:27:54] Speaker 09:
It is a fundamental affront.

[00:27:56] Speaker 09:
Does this mean that nobody can arbitrate within the EU?

[00:27:59] Speaker 08:
Because what about private parties?

[00:28:01] Speaker 09:
So ComStory paragraph 65 says that the limits of this are respect to EU member and EU nationals.

[00:28:08] Speaker 09:
It's not speaking to private arbitration.

[00:28:11] Speaker 09:
It's the same principle.

[00:28:12] Speaker 08:
The whole idea about arbitration is parties are agreeing to it, consenting to let this arbitrator just decide this case.

[00:28:19] Speaker 08:
And it saves time, like as Judge Rogers said.

[00:28:22] Speaker 08:
We're not litigating.

[00:28:23] Speaker 08:
And we're just going to abide by this.

[00:28:25] Speaker 08:
It's an agreement among the parties.

[00:28:27] Speaker 08:
And it has no precedential value.

[00:28:29] Speaker 08:
It has no presidential effect.

[00:28:30] Speaker 08:
So it doesn't affect the primacy of EU law.

[00:28:35] Speaker 08:
It doesn't affect the EU's interest in making sure the law is consistent.

[00:28:39] Speaker 08:
And if it does, then why is that different from private arbitration that interprets EU law?

[00:28:45] Speaker 09:
Respectfully, the European Court of Justice truly has said in many, many opinions that even arbitration, if it involves an EU member,

[00:28:54] Speaker 09:
and an investor or another EU member really does offend the system.

[00:28:58] Speaker 09:
I understand that.

[00:28:59] Speaker 09:
My question is why?

[00:29:00] Speaker 09:
Yes.

[00:29:00] Speaker 09:
And the why is because as part of forming the EU to develop a coherent body of law and to ensure that EU... Non-precedential.

[00:29:09] Speaker 09:
So how is this part of developing a coherent body of law?

[00:29:12] Speaker 09:
It's taking a dispute that should be developed by the European Court of Justice out of the European Court of Justice.

[00:29:17] Speaker 09:
You're saying they have to litigate.

[00:29:19] Speaker 09:
we are saying between EU members, that is what people agree to.

[00:29:22] Speaker 09:
And it does not, the come straight decision, the European Court of Justice has not- So that means any EU member cannot arbitrate.

[00:29:29] Speaker 09:
And between each other, that is- Ever.

[00:29:32] Speaker 09:
So yes, that is, you cannot do that because it's not an arbitrary, unless the arbitral tribunal were allowed to have de novo review by the European Court of Justice, this is what that court held.

[00:29:43] Speaker 04:
So you also say that no tribunal outside the EU can decide an issue of EU law.

[00:29:52] Speaker 04:
But you're also asking us to apply EU law, right?

[00:29:58] Speaker 04:
So under your reading of ACMEA, it violates EU law for us to decide the case in your favor.

[00:30:07] Speaker 04:
I'm not really following how that

[00:30:10] Speaker 04:
It doesn't run afoul of the very principle on which your case rests.

[00:30:14] Speaker 09:
No, our argument is that because EU law governs, you should apply what the European Court of Justice has said and respect that it has interpreted EU law as governing and it's interpreted EU law clearly.

[00:30:27] Speaker 09:
We obviously understand.

[00:30:28] Speaker 08:
You just said you want us to apply EU law.

[00:30:30] Speaker 09:
Yes, and so the argument is not courts can never resolve a dispute involving EU law in any context.

[00:30:36] Speaker 09:
The alternative would be what Spain is supposed to argue, EU law never applies.

[00:30:41] Speaker 09:
Spain is arguing there's no jurisdiction over Spain under the Foreign Sovereign Immunities Act in the first instance.

[00:30:46] Speaker 04:
In order to so hold, we would have to apply EU law.

[00:30:51] Speaker 04:
And Ahmed is saying our international arbitration tribunal can't even apply, let alone interpret.

[00:30:58] Speaker 04:
EU law, but you're asking us to apply it.

[00:31:01] Speaker 09:
So what we're saying is there are contexts in which obviously EU law has to be applied.

[00:31:06] Speaker 09:
This is one of them.

[00:31:07] Speaker 09:
And that in order to avoid the issues with, uh, with, with letting parties circumvent their obligations here, there's no other choice.

[00:31:15] Speaker 09:
I mean, Spain can't get up here and say what, like no EU law applies.

[00:31:20] Speaker 04:
The other choice is full faith and credit.

[00:31:21] Speaker 04:
I mean, there's no, there's no question that Spain is a member of

[00:31:28] Speaker 04:
exit and that this case was arbitrated under exit and that we as a U.S.

[00:31:37] Speaker 04:
court are bound to give that award full faith and credit.

[00:31:42] Speaker 04:
And so that award has done its job in deciding

[00:31:48] Speaker 04:
what you claim is a threshold jurisdictional question that would otherwise be for us.

[00:31:54] Speaker 04:
So we decide that, but we're bound separately by the exit treaty, exit convention to give full-time faith and credit.

[00:32:03] Speaker 04:
So why is our job not done?

[00:32:05] Speaker 09:
Because that respectfully, that would both create a circuit split and do violence to the Foreign Sovereign Immunities Act, which is the only source of subject matter jurisdiction.

[00:32:12] Speaker 09:
1650A, which is the full faith and credit provision for exit, is not a source of subject matter jurisdiction.

[00:32:19] Speaker 09:
The Foreign Sovereign Immunities Act requires federal courts to assure themselves that they have jurisdiction.

[00:32:24] Speaker 09:
And just sort of outsourcing the jurisdictional determination to arbitrators does not do that job and would be flatly contrary to the way this court has actually done an inquiry into whether questions are arbitrability or existence of the arbitration agreement.

[00:32:40] Speaker 09:
Not only- What's your circuit split?

[00:32:42] Speaker 09:
The circuit split is with the Second Circuit.

[00:32:43] Speaker 09:
The Mobile Serial Decision very clearly holds that you can't just use the New York Convention or ICSID as if they're sort of separate bodies of law.

[00:32:51] Speaker 09:
And Amirata Hess from the Supreme Court also says,

[00:32:54] Speaker 09:
The only source of jurisdiction over foreign sovereigns is the Foreign Sovereign Immunities Act.

[00:32:58] Speaker 09:
You can't just look to the exit, you can't look at something else.

[00:33:05] Speaker 08:
But what you can do with the ECT.

[00:33:10] Speaker 04:
And MOBA was under the waiver exception, not the arbitration.

[00:33:13] Speaker 09:
But the principles it's applying are the starting point for the inquiry is that the Foreign Sovereign Immunities Act does not sort of allow you to look to other

[00:33:21] Speaker 09:
treaty implementing provisions as if they supply subject matter jurisdiction.

[00:33:25] Speaker 09:
This court still must.

[00:33:25] Speaker 04:
We look to facts and decisions.

[00:33:28] Speaker 04:
I mean, we look to the existence of an agreement to arbitrate.

[00:33:31] Speaker 04:
We look to whether there's an award.

[00:33:33] Speaker 04:
I mean, those are facts in the world that we have to honor and credit in order to make our own immunity decision under the FSIA, don't we?

[00:33:45] Speaker 09:
I think it would be contrary to also this court's decision in Belize and even Chevron and still X to sort of say you're no longer going to take a look at whether the question is one of formation or our ability and if it is one of formation, you're no longer going to look for yourselves.

[00:34:01] Speaker 09:
whether in Belize's case, for instance, the prime minister had the power to agree to arbitration.

[00:34:07] Speaker 09:
Those cases don't make any sense under the other side's view that you're just sort of checking boxes and looking if there's an agreement to arbitrate because all of those cases also involve delegation.

[00:34:16] Speaker 04:
Weren't those cases New York Convention cases, not exit cases?

[00:34:19] Speaker 04:
I mean, we're in a very different situation, I think, under

[00:34:23] Speaker 04:
exit because of the full faith or credit.

[00:34:25] Speaker 04:
We really, it's an extremely powerful treaty in terms of the credit we have to give to the arbitration.

[00:34:33] Speaker 09:
Two responses.

[00:34:33] Speaker 09:
First of all, the McCullough decision, obviously not presidential, but it did involve exit and this court and Judge Mehta and the district court did a very fulsome analysis.

[00:34:42] Speaker 09:
It would be flatly incompatible with the idea that the exit convention meant you just sort of drop pencils and say that the issue is delegated, there's an award, you're all done.

[00:34:52] Speaker 09:
And with respect to exit, again, relying on the idea that you give an award full faith or credit still puts the cart before the horse because that is what happens if there actually is jurisdiction under the Foreign Sovereign Immunities Act to begin with.

[00:35:05] Speaker 09:
But otherwise you'd have circumstances, potential circumstances in which you are not actually ascertaining for yourselves whether an arbitration agreement exists.

[00:35:13] Speaker 09:
You're sort of rubber stamping whatever an arbitral terminal might or might not have said on this.

[00:35:17] Speaker 09:
And again, that is contrary to both bedrock principles of really bedrock principles of arbitration everywhere.

[00:35:23] Speaker 09:
I would point you to the China mid-medals decision that we cited from the Third Circuit.

[00:35:28] Speaker 09:
because that decision canvases both Foreign Sovereign Immunities Act, International Practice, Domestic Foreign Federal Arbitration Act practice.

[00:35:36] Speaker 09:
And I think just refutes the idea that ICSID is somehow a sort of super powered convention that allows you to bypass the jurisdictional inquiry that applied.

[00:35:46] Speaker 09:
If that's what the- I'd like to ask a question about the injunction, if I may.

[00:35:49] Speaker 08:
There's a lot of talk about comedy with respect to this injunction.

[00:35:55] Speaker 08:
Isn't it Spain who acted with a lack of comedy by bringing a suit in another country just to stop the proceedings in the US courts?

[00:36:05] Speaker 09:
Absolutely not.

[00:36:06] Speaker 09:
Spain's only choice in order to enforce its obligations under EU law and to cease circumvention of those obligations was to try to bring suits in the investors' home countries, which is where you would expect litigation to be brought.

[00:36:18] Speaker 09:
And comedy interests that this court talked about in Laker Airways are about the singular affront that would happen from subjecting a foreign student to.

[00:36:28] Speaker 08:
I think comedy is a little bit broader.

[00:36:29] Speaker 08:
It's about respecting proceedings in foreign courts.

[00:36:33] Speaker 08:
and think there is definitely a very strong interest when there's a sovereign involved.

[00:36:37] Speaker 08:
I accept that.

[00:36:39] Speaker 08:
But it just seems to me that that's the entire goal and purpose of the suit brought by Spain as the Netherlands and Luxembourg was to stop the US proceedings.

[00:36:51] Speaker 08:
That seems to be a lack of comedy on Spain's part.

[00:36:54] Speaker 09:
Spain is respecting, I mean, again, I'm not sure what Spain was supposed to do in order to enforce its EU law obligations in order to say that there is.

[00:37:02] Speaker 08:
But I guess what Spain could have done is allow this proceeding to go forth while trying to confirm whether or not they have to pay in the EU courts and then ask for a stay of these proceedings while that's being decided.

[00:37:16] Speaker 08:
It just seems that trying to stop these proceedings, it's very much like Laker Airways, except I do understand that the

[00:37:23] Speaker 08:
The party is a sovereign and not a private company.

[00:37:26] Speaker 08:
But the whole purpose of it was to stop the US suit for confirmation of the award.

[00:37:33] Speaker 09:
And I think if you bought that view, anti-suit injunctions against foreign sovereigns would suddenly become commonplace in US courts.

[00:37:39] Speaker 09:
Because you would be saying, I guess would be asking only, is there some attempt by a foreign sovereign to stop litigation in the United States?

[00:37:48] Speaker 09:
And if that were the test, again, it would not be the case that across the world, foreign sovereigns would

[00:37:53] Speaker 09:
virtually, it would be unheard of to enjoin foreign sovereigns.

[00:37:55] Speaker 08:
It seems to me that there are cases not like this one, where they're just parallel proceedings going on in foreign courts and US courts.

[00:38:02] Speaker 08:
And then it's kind of trying to get to the end and who's going to get there first and then assert race judicata or whatever.

[00:38:08] Speaker 08:
But this is a different kind of case, which is more like Laker Airways, where the whole purpose of the litigation in Luxembourg and in the Netherlands was to stop this litigation.

[00:38:19] Speaker 08:
And it seems to me that if all people subject

[00:38:23] Speaker 08:
all sovereign subject to exit could go and just try to stop investors from trying to apply exit.

[00:38:30] Speaker 08:
It would just collapse if they can sue in these national courts to stop exit proceedings.

[00:38:36] Speaker 08:
They said would collapse.

[00:38:37] Speaker 08:
And the whole purpose of exit is to prevent investors from having to go to these national courts to seek justice because the idea of it is

[00:38:44] Speaker 08:
they should be entitled to a neutral arbiter through this international arbitration system and not be subject to any any courts, national courts.

[00:38:53] Speaker 09:
And I respectfully disagree on two fronts.

[00:38:55] Speaker 09:
First of all, that Laker Airways is in any way resembling this case.

[00:38:59] Speaker 09:
In that case, the whole point was to deprive of any form for litigating antitrust claims.

[00:39:04] Speaker 09:
Again, the whole point of Spain's litigation is that these claims only properly belong in the investors home states or within the European Union.

[00:39:12] Speaker 09:
So that is the

[00:39:14] Speaker 04:
Finish your question.

[00:39:15] Speaker 09:
I want to.

[00:39:15] Speaker 09:
Sorry.

[00:39:16] Speaker 09:
That is the point of fame was doing.

[00:39:17] Speaker 09:
And second of all, the idea that exit is going to collapse if investors cannot bring these suits or there's some sort of there's some sort of undermining seems defied by practice in which again, the European Court of Justice is holding that there is no arbitration among intra EU members under exit in the European food decision and the collateral consequences of requiring EU members to say

[00:39:39] Speaker 09:
and to object to such arbitrations and to claw back such awards, Exxon is not collapsing because people understand and the signatories understand that this is just not something that EU members agree to.

[00:39:49] Speaker 04:
Why then didn't Spain go into the Dutch or the Luxembourgish courts to stop the arbitration before it concluded?

[00:39:59] Speaker 04:
It seems to me you'd be in a better position.

[00:40:02] Speaker 09:
Spain at that point was resisting, attempting to, you know, resist the arbitration every way it could.

[00:40:09] Speaker 09:
I don't know the details of when it would have been, whether it would have been jurisdictionally premature to do so, but it's sort of just the question of what Spain should have done as a litigant, I think underscores why an antecedent junction is so strange.

[00:40:21] Speaker 09:
You're sort of second guessing

[00:40:22] Speaker 09:
what a foreign sovereign can or cannot do in litigation context.

[00:40:26] Speaker 09:
As the United States points out, there's a very strong reciprocal interest in not having foreign sovereigns also second guess what the United States is doing in foreign courts.

[00:40:35] Speaker 09:
And again, that is why no circuit court ever has greenlit this kind of injunction and why it would be so extraordinary here.

[00:40:41] Speaker 04:
And even under the injunction that Judge Chuckin put in place, it doesn't prevent Spain from seeking monetary relief from

[00:40:51] Speaker 04:
through the Dutch and Luxembourgish courts to effectively claw back, to recoup whatever these investors managed to win in the United States.

[00:41:05] Speaker 04:
So why doesn't that really lower the temperature, lower the stakes on these proceedings?

[00:41:10] Speaker 04:
Because the EU, as unified as you describe it, will in the end come to Spain's rescue.

[00:41:20] Speaker 09:
Well, respectfully, the idea that Spain's litigation choices are supposed to be sort of dictated by others, especially in other countries courts is sort of like doubling the offense.

[00:41:31] Speaker 04:
It's sort of saying Spain did join some treaties.

[00:41:34] Speaker 04:
That's why its choices are being dictated.

[00:41:38] Speaker 09:
And again, we can go through this.

[00:41:40] Speaker 09:
Again, Spain's position is that the treaties that agreed to did not involve this type of consent.

[00:41:44] Speaker 09:
And Spain's position is consistent with the idea that EU law is primary, is imposing obligations on Spain to resist this sort of circumvention of the EU system.

[00:41:53] Speaker 09:
And that if courts... Isn't Spain just trying to get out of its commitments?

[00:41:57] Speaker 08:
I mean, it owes more than $1.3 billion for 16 unpaid investor state awards.

[00:42:02] Speaker 08:
It just doesn't want to pay.

[00:42:04] Speaker 08:
It's about the benefits of all this investment and now they don't want to hold up there under the bargain by going to arbitration, which they agreed to in the ECT.

[00:42:12] Speaker 09:
So two responses.

[00:42:13] Speaker 09:
One, no, Spain is not trying to get out of something it agreed to.

[00:42:17] Speaker 09:
Spain's position throughout has been it didn't agree to this.

[00:42:19] Speaker 09:
And second of all, I don't think it's just a sort of opportunistic view of the energy target.

[00:42:23] Speaker 08:
Just take a step back.

[00:42:24] Speaker 08:
Do you think these investors wouldn't have necessarily invested all this money in Spain without the assurance that

[00:42:30] Speaker 08:
If something like this were to happen and Spain wanted to get out of it, they wouldn't have a neutral arbiter to decide this dispute.

[00:42:36] Speaker 09:
I'm glad you raised what the investors should have understood at the time that they invested and at the time they purported to form these agreements in 2011 and 2014 and 15, because I think the first and foremost thing that European investors in the EU member states understand is that EU law is going to be the paramount law governing the relationship.

[00:42:54] Speaker 09:
And the second thing they would understand at the time of these things is that intra-EU arbitration at the time was absolutely unheard of.

[00:43:01] Speaker 08:
So they can't rely on the words of the ECT.

[00:43:03] Speaker 09:
Well, I think what they can rely on is the text of the ECT and going back to it, that the EU joined it, which at the time.

[00:43:09] Speaker 09:
Correct.

[00:43:09] Speaker 08:
And the text of the ECT says there's an unconditional agreement and consent to arbitrate with an investor that asks for it.

[00:43:17] Speaker 09:
Or under the UNSATRAO.

[00:43:19] Speaker 09:
And again, what people would understand from certainly from 2006 onward from the Ireland decision is that when you have such an international agreement,

[00:43:26] Speaker 09:
the EU joins it, even if you have an arbitration provision that is exactly like the ECTs, you do not have consent to EU arbitration.

[00:43:34] Speaker 03:
Just one other thing with respect to clarify your position.

[00:43:38] Speaker 03:
Your position then is that there is no arbitration in the EU in the sense that neither its highest judicial authority could so find

[00:43:53] Speaker 03:
nor its highest legislative body could so provide?

[00:44:00] Speaker 09:
There's no intra-EU arbitration in the sense between an EU member and another EU member or EU member or nationals.

[00:44:09] Speaker 09:
And that is, again, based on what the European Court of Justice has said, that there is just no power to agree to that sort of thing.

[00:44:16] Speaker 03:
And it said neither its highest judicial authority

[00:44:22] Speaker 03:
nor its highest legislative authority could provide for such arbitration.

[00:44:29] Speaker 01:
In other words, the EU is a closed

[00:44:36] Speaker 03:
I don't know what to call it, a closed governmental entity.

[00:44:40] Speaker 09:
So the only way it could be provided for would be if you had arbitration and then it was reviewable de novo by the European Court of Justice.

[00:44:48] Speaker 03:
Well, that's not arbitration.

[00:44:49] Speaker 03:
I mean, we discussed what is arbitration and why parties have sought arbitration, particularly commercial parties.

[00:44:56] Speaker 03:
So your position is that there can be no arbitration among commercial parties who are members of the EU.

[00:45:06] Speaker 03:
period that the EU's highest court and the EU's highest legislature neither would provide that power to a member of the EU.

[00:45:25] Speaker 09:
So I think my position, just thinking about where it comes from, is Article 344 of the treaty.

[00:45:30] Speaker 03:
No, but where does it go?

[00:45:32] Speaker 03:
That's what I'm trying to understand, all right?

[00:45:35] Speaker 03:
And what I hear you saying is there is none and there can be none.

[00:45:39] Speaker 03:
And I want to be clear if you have some qualifications on that.

[00:45:45] Speaker 03:
I haven't heard any so far.

[00:45:47] Speaker 09:
The qualifications, I think, are best expressed in paragraph 65 of the comms rate decision.

[00:45:53] Speaker 09:
The limitations are between EU member, so country, country, or country, EU member, and EU national.

[00:46:01] Speaker 09:
That is the full limits of what the European Court of Justice has said on this, and the reason is, again.

[00:46:07] Speaker 03:
That's not my question, counsel, and you're sharp enough to know it.

[00:46:12] Speaker 09:
With respect, Judge Rogers, that is the limit that we know.

[00:46:18] Speaker 09:
And the other limit is that to the extent there is an attempt to, if you say arbitration is allowed in the home countries, your domesticated and the European Court of Justice can review that, that would also satisfy the limitation.

[00:46:32] Speaker 09:
But the limitation just is what it is and always has been since 1957, which is- But it never changes your argument to us today.

[00:46:40] Speaker 09:
You could change it through treaty amendment, but that is not what has happened with the treaties on the functioning of the European Union.

[00:46:45] Speaker 03:
How would that treaty be amended?

[00:46:48] Speaker 09:
The members of the European Union would get together, which they have done with the treaty on the functioning of the EU.

[00:46:54] Speaker 09:
What would the treaty say?

[00:46:55] Speaker 09:
The treaty would say that we no longer, you know, you no longer have to turn to the European Court of Justice as the, no longer has privacy.

[00:47:02] Speaker 09:
That's one way of doing it.

[00:47:03] Speaker 03:
Who has authority to do that under your argument?

[00:47:07] Speaker 09:
Well, it's a treaty, so you would have to have the treaty signatories do it, because the understanding of the treaty.

[00:47:11] Speaker 03:
You couldn't sign that treaty.

[00:47:13] Speaker 09:
The EU, it would be a matter about what the EU can or cannot do.

[00:47:18] Speaker 09:
So the EU members would be making the treaty, which is what they do.

[00:47:20] Speaker 03:
Your argument, so far as I can see it, cuts off members of the EU in a way that you say everybody understood, but I certainly never understood

[00:47:34] Speaker 03:
the EU's position to be what you're saying today.

[00:47:36] Speaker 03:
And the cases that have been cited to us, as well as our own authorities, haven't said that in those terms.

[00:47:48] Speaker 03:
And as you know, courts are very good as our lawyers of distinguishing cases.

[00:47:54] Speaker 03:
But I think it's an astounding argument we're hearing today.

[00:47:59] Speaker 03:
And maybe the European Commission

[00:48:02] Speaker 03:
confirm it, but in any event.

[00:48:05] Speaker 09:
I mean, respectfully, the European Union is an innovation where sovereigns gave the European Union certain powers.

[00:48:13] Speaker 09:
And that decision has consequences and has always had consequences.

[00:48:17] Speaker 09:
And that is why the signatories to the Energy Charter Treaty.

[00:48:19] Speaker 03:
That's what we're trying to distinguish here.

[00:48:22] Speaker 03:
Anyway, I will belabor this.

[00:48:23] Speaker 03:
Thank you, Council.

[00:48:27] Speaker 04:
Did you reserve time for rebuttal?

[00:48:29] Speaker 09:
Yes, I reserved three minutes.

[00:48:33] Speaker 04:
As you know, our practice is to give you a time limit.

[00:48:37] Speaker 04:
And then we promptly seem to disregard it with our active questioning.

[00:48:42] Speaker 04:
So you will have an opportunity.

[00:48:44] Speaker 04:
Thank you.

[00:48:44] Speaker 04:
Just a rebuttal.

[00:48:46] Speaker 04:
And we will next hear from the European Commission.

[00:48:49] Speaker 01:
And that's is it miss pay?

[00:49:01] Speaker 01:
Good morning.

[00:49:01] Speaker 01:
May it please the court, Sally Pay for the European Commission.

[00:49:04] Speaker 07:
I'm also pleased to introduce Lorna Armati, Petra Nomechkova, and Paul John Lowenthal from the Commission's legal service, who have traveled from Brussels to observe argument today.

[00:49:15] Speaker 07:
The investor's position is extraordinary on every level.

[00:49:19] Speaker 07:
It ignores the EU treaties, which are the foundational instruments of the EU legal order.

[00:49:24] Speaker 07:
It disregards the decisions of the EU's highest court about an issue that's of fundamental importance to the EU structure.

[00:49:30] Speaker 07:
And it seeks to restrain an EU member state from pursuing litigation in EU courts on questions of EU law.

[00:49:37] Speaker 08:
This is all answered.

[00:49:38] Speaker 08:
Kind of following up on Judge Pillers question to Ms.

[00:49:42] Speaker 08:
Harris.

[00:49:44] Speaker 08:
We're trying to understand the EU's interest here because there is this

[00:49:51] Speaker 08:
declaration in your brief that this case implicates the EU's authority and primacy and all these things.

[00:49:58] Speaker 08:
But given that arbitral awards are non-precedential, how is that a threat to, I guess, the supremacy of the EU courts?

[00:50:09] Speaker 07:
So I think as Ms.

[00:50:10] Speaker 07:
Harris was discussing toward the end of the argument, the question really goes back to two key provisions of the EU treaties, which are Articles 344 and Article 267.

[00:50:20] Speaker 07:
Under Article 344, the EU member states agreed that they would never submit questions of EU law for resolution outside the EU judicial system.

[00:50:30] Speaker 07:
And Article 267 is the other side of that same coin.

[00:50:33] Speaker 07:
It provides that questions of EU law must be ventilated through the EU system so that they can be referred.

[00:50:39] Speaker 08:
Even if it's non-precedential?

[00:50:40] Speaker 08:
Because if it's non-precedential, it doesn't affect your case law.

[00:50:45] Speaker 08:
It doesn't affect anything.

[00:50:46] Speaker 08:
It's just two parties agreeing on something.

[00:50:48] Speaker 08:
That's what arbitration

[00:50:49] Speaker 08:
is, and it's just more efficient.

[00:50:51] Speaker 07:
So with respect to questions of the Energy Charter Treaty, the Energy Charter Treaty is EU law as between matter states.

[00:50:57] Speaker 08:
I guess my question is more basic than that, which is I don't understand why the EU has an interest in not letting people arbitrate.

[00:51:06] Speaker 07:
So the interest really is in ensuring that questions of EU law are developed and ventilated within the European Union.

[00:51:12] Speaker 08:
But there's no developing or ventilating happening if it's non-precedential, is there?

[00:51:17] Speaker 07:
Well, it is to the extent that EU members and EU nationals should not be submitting questions outside the EU system.

[00:51:24] Speaker 07:
For them to be able to go outside the EU system to resolve disputes that really are internal to the EU and should have been governed by EU law in the first place is quite detrimental.

[00:51:32] Speaker 08:
So what about arbitrations between EU and non-EU signatories to the ECT that involve EU law?

[00:51:40] Speaker 08:
You say that an arbitral panel can decide those.

[00:51:45] Speaker 07:
In such a case, the questions being presented in that kind of arbitration would not necessarily raise questions of EU law in the same way as a dispute between an EU member state and an energy charter treaty.

[00:52:00] Speaker 07:
So I think there could be situations conceivably where if the arbitral tribunal were being asked actually to resolve a legal question of EU law,

[00:52:10] Speaker 07:
It's conceivable that the same questions of primacy would arise.

[00:52:15] Speaker 07:
I would note that the Court of Justice has not reached this particular question.

[00:52:19] Speaker 07:
It's left open.

[00:52:20] Speaker 07:
Comstroy seems to suggest that there is a distinction here if there were a case involving a third-country investor.

[00:52:27] Speaker 08:
Just sort of putting the law aside, though, I'm just trying to understand, where would you draw this line?

[00:52:31] Speaker 08:
You have decided this principle.

[00:52:34] Speaker 08:
You know, EU courts should decide EU law.

[00:52:36] Speaker 08:
And we have private parties settling based on their understanding of EU law.

[00:52:40] Speaker 08:
We have private parties arbitrating based on an arbitrator's interpretation of EU law.

[00:52:47] Speaker 08:
We have EU members arbitrating with non-EU people deciding questions of EU law.

[00:52:52] Speaker 08:
All of these things are happening.

[00:52:54] Speaker 08:
And that doesn't seem to be disrupting the primacy of EU law because it's non-precedential.

[00:53:01] Speaker 07:
So with respect to the different scenarios that you've referred to, with respect to purely private disputes that might involve questions of EU law as a matter of fact, for example, the Court of Justice, I think, has recognized that those do not raise the same kinds of concerns as you have in Acmea and Comstroy.

[00:53:19] Speaker 07:
And that's partly because those arbitrations are not based on an agreement by a member state, a treaty agreement.

[00:53:28] Speaker 07:
to take these disputes outside the EU legal system.

[00:53:30] Speaker 07:
So I think there's something fundamentally different between two commercial parties agreeing.

[00:53:34] Speaker 08:
So are you saying it's not about the actual substance of the EU law that's being interpreted?

[00:53:39] Speaker 08:
It's about the act of agreeing by the members?

[00:53:42] Speaker 07:
That's at least a line that the Court of Justice has drawn so far.

[00:53:46] Speaker 07:
It has carved out commercial arbitration.

[00:53:48] Speaker 04:
And the reason why the members have signed

[00:53:52] Speaker 04:
Exit and uncentral and private parties benefit from that.

[00:53:58] Speaker 04:
I'm not sure that I'm seeing your distinction.

[00:54:00] Speaker 04:
You say that purely private settlements or arbitrations aren't threats because they're not based on a treaty agreement by EU members to take the cases outside.

[00:54:13] Speaker 04:
But exit is a treaty agreement to take the cases outside the EU core system.

[00:54:18] Speaker 07:
So if I might just back up a little bit and finish the answer that I was going to give.

[00:54:22] Speaker 07:
I'm sorry about that.

[00:54:23] Speaker 07:
So first of all, the question about commercial, the idea is that there are two private parties that have agreed between themselves.

[00:54:31] Speaker 07:
The Court of Justice has said that that does not raise the same issues and for the reason that it's not through a treaty agreement between EU member states.

[00:54:41] Speaker 07:
In addition, those kinds of disputes are subject to review in EU courts

[00:54:47] Speaker 07:
to the extent that there may be set aside proceedings at the end of the arbitration, those questions of EU law can still be ventilated within the EU system.

[00:54:55] Speaker 07:
Now, turning to the question about exit and arbitration agreements that member states have signed, as Ms.

[00:55:03] Speaker 07:
Harris was explaining, here, Spain did not have the capacity to enter into an agreement to arbitrate disputes between itself and members of another EU member state.

[00:55:15] Speaker 04:
But it has signed exit.

[00:55:17] Speaker 04:
So a Spanish private entity and a Dutch private entity could, Spain could enter an agreement that allows those private parties to take their dispute outside.

[00:55:33] Speaker 04:
And that's this action by Spain.

[00:55:35] Speaker 07:
So if it were going to be a dispute between a Spanish private party and a Dutch private party, you would not need an investment treaty to do that.

[00:55:43] Speaker 07:
That would be a purely, that would be an agreement just between these parties.

[00:55:48] Speaker 04:
But the parties want to, it exits only with governments.

[00:55:51] Speaker 04:
Correct.

[00:55:52] Speaker 04:
How about Ancetral, same?

[00:55:55] Speaker 07:
Ancetral, I think that that would govern.

[00:55:57] Speaker 07:
So Ancetral governs commercial arbitrations as well.

[00:55:59] Speaker 07:
So you could have a private arbitration agreement between two parties.

[00:56:03] Speaker 07:
But Ancetral is,

[00:56:05] Speaker 07:
Yeah, again, that would be a set of rules.

[00:56:08] Speaker 04:
The governments are signatories.

[00:56:09] Speaker 07:
Correct.

[00:56:12] Speaker 04:
I thought you were making a point that the governments couldn't even purport to be signatories to something that affords arbitration to bilateral private party disputes.

[00:56:23] Speaker 04:
It wasn't your point.

[00:56:24] Speaker 07:
So I think my point was that there would be no need for a sovereign state to enter into such an agreement that would govern

[00:56:32] Speaker 07:
purely commercial arbitrations between private parties.

[00:56:34] Speaker 07:
But they have, no?

[00:56:37] Speaker 07:
So with respect to the conventions like the exit convention and the New York convention, those are not in themselves arbitration agreements.

[00:56:47] Speaker 07:
They govern the enforceability and it's a framework for arbitration, but the substantive

[00:56:54] Speaker 07:
agreement to arbitrate, even if you're talking about the context of investor state arbitration, that's why you need recourse to something like the Energy Charter Treaty or a bilateral investment agreement.

[00:57:05] Speaker 07:
You cannot, unfortunately, simply look to the ICCID convention and say that that is endorsing arbitration.

[00:57:12] Speaker 03:
So I understand your position.

[00:57:15] Speaker 03:
I understand your point about there's no need for a sovereign state, which is a member

[00:57:25] Speaker 03:
of the EU to enter an agreement with a private commercial corporation located in another sovereign state.

[00:57:38] Speaker 03:
But wasn't what happened here an example of why it was necessary?

[00:57:46] Speaker 03:
I mean, in order to attract investors, the sovereign state was offering tax benefits

[00:57:56] Speaker 03:
So with respect to- Private parties can't do that.

[00:58:00] Speaker 03:
And private parties may not be willing to enter a contract that's financially beneficial.

[00:58:08] Speaker 07:
So I agree with your point, Judge Rogers, that in many cases, investment treaties serve as an important reason for investors to invest in foreign countries.

[00:58:20] Speaker 07:
The point with respect to the Energy Charter Treaty and intra-EU investment agreements is that these kinds of agreements never were designed to provide benefits that would apply within the EU.

[00:58:33] Speaker 07:
Investment protection within the EU is governed by EU law and EU regulations, and those are the remedies that EU investors should have availed themselves of if they believe.

[00:58:42] Speaker 08:
So I understand that that's your position, and that could be a question of arbitrability versus whether or not there was an agreement.

[00:58:50] Speaker 08:
I want to put that aside for a moment and just say that the EU did sign the ECT, which has language that says there's unconditional consent to arbitrate.

[00:58:59] Speaker 08:
Spain signed it too, and there's no disconnection clause that carves out anything for entry EU disputes.

[00:59:09] Speaker 08:
So why

[00:59:10] Speaker 08:
Can't the EU and Spain just be held to what they signed in the ECT?

[00:59:14] Speaker 08:
And if you want to litigate these other issues, the question of arbitrability, they got to litigate these issues before the exit tribunal.

[00:59:24] Speaker 07:
So first of all, with respect to the disconnection clause, a disconnection clause would have been superfluous here.

[00:59:30] Speaker 07:
Member states are already under obligations to accord primacy to EU law.

[00:59:34] Speaker 07:
So the purpose of a disconnection clause in any treaty would be only to inform non-EU parties

[00:59:39] Speaker 07:
of the existence of the EU and the existence of EU obligations that govern member states that are signing onto this.

[00:59:47] Speaker 08:
I'm just looking at the plain language of the ECT, and that seems to be contrary to what you're saying.

[00:59:51] Speaker 08:
I know that that's your legal position, which can be litigated, but the EU and Spain signed the ECT, which has very plain language about arbitration.

[01:00:03] Speaker 08:
I know your position.

[01:00:05] Speaker 08:
The question is, who do you get to argue that before?

[01:00:07] Speaker 08:
If it's a question of arbitrability, it's before the arbitral panel.

[01:00:10] Speaker 08:
And I believe you intervened and did argue this position before the arbitral panel, and it was rejected.

[01:00:16] Speaker 08:
But in any event, I don't see why the ECT language doesn't control here.

[01:00:22] Speaker 08:
And if there's a problem with it, the EU and Spain should withdraw from the ECT.

[01:00:26] Speaker 07:
So respectfully, your honor, I will first address the point about about whether this court can can look at this.

[01:00:32] Speaker 07:
And it's it's not a question of arbitrability.

[01:00:34] Speaker 07:
It's a question of the formation of the agreement.

[01:00:37] Speaker 07:
And the absolutely has the ability and obligation to review this question to know on the question of the language of the Energy Charter Treaty.

[01:00:46] Speaker 07:
I suppose you're referring to the paragraph Article 26, paragraph 3A, which contains the

[01:00:53] Speaker 07:
language about unconditional consent.

[01:00:55] Speaker 07:
Yes, I would also point you to Article 2626 one, which delineates the kinds of disputes that are being contemplated for submission to arbitration.

[01:01:08] Speaker 07:
It says disputes between a contracting party

[01:01:11] Speaker 07:
and an investor of another contracting party relating to an investment of the latter in the area of the former, which an alleged breach will be settled amicably.

[01:01:20] Speaker 07:
And then that's the kind of dispute that would be submitted for resolution.

[01:01:25] Speaker 07:
Now, I would note that contracting party here is a defined term.

[01:01:30] Speaker 07:
So you go back to the definition section.

[01:01:32] Speaker 07:
Article 1.2 provides that a contracting party may include a regional economic integration organization.

[01:01:38] Speaker 07:
And it's understood that the regional economic integration organization, the paradigm example of that is the EU.

[01:01:45] Speaker 07:
And then you look to Article 1.3, which I understand this is quite a complicated, yes.

[01:01:50] Speaker 08:
It is, it's very convoluted.

[01:01:52] Speaker 07:
Right.

[01:01:52] Speaker 08:
But- Section 3 is very straightforward.

[01:01:54] Speaker 07:
Yes.

[01:01:54] Speaker 08:
Unconditional consent.

[01:01:55] Speaker 08:
And what about Section 5?

[01:01:55] Speaker 04:
Wait, wait, but continue.

[01:01:56] Speaker 04:
I want to hear the rest of the example.

[01:01:57] Speaker 04:
You say then you go to Article 1.3.

[01:01:59] Speaker 07:
1.3 is about the regional economic integration organization.

[01:02:03] Speaker 07:
And this is the provision that Ms.

[01:02:04] Speaker 07:
Harris was discussing with you earlier, which

[01:02:07] Speaker 07:
explains that a regional economic integration organization is an entity constituted by states to which they have transferred competence over certain matters, a number of which are governed by this treaty, including the authority to take decisions binding on them in respect of those matters.

[01:02:24] Speaker 07:
And so in an intra-EU situation, the relevant contracting party for purposes of Article 26.1 is the European Union.

[01:02:34] Speaker 07:
And so there's no, you don't have the requisite diversity between the investor of a contracting party and the investor of another contracting party in an intra-EU situation.

[01:02:44] Speaker 08:
So that's the textual argument for why this particular- Can you address subsection five, which says the consent given in paragraph three together with the written consent of the investor given pursuant to paragraph four shall be considered to satisfy the requirement for written consent of the parties to a dispute.

[01:03:03] Speaker 08:
and or an agreement in writing for purposes of Article 2 of the New York Convention.

[01:03:09] Speaker 08:
There's also a provision that says this is an agreement to arbitrate.

[01:03:13] Speaker 07:
So paragraph 5 is the paragraph that provides that you need both consent in paragraph 3 and written consent by the investor to create an arbitration agreement for purposes of these, for purposes of the UN Convention and the unsuitable rules and the exit convention.

[01:03:28] Speaker 07:
The reference to the consent in paragraph three.

[01:03:34] Speaker 07:
then refers you back to dispute, which is governed by 26.1.

[01:03:38] Speaker 07:
That defines the universe of disputes that are being contemplated could be submitted to arbitration.

[01:03:45] Speaker 07:
And again, you need diversity between the contracting party and the investor of the other contracting party.

[01:03:52] Speaker 07:
In an intra-EU situation, there is no diversity because the contracting party is the EU as recognized by the inclusion of the regional economic integration organization.

[01:04:03] Speaker 04:
You mentioned in your brief that the European Commission is considering whether to permit Spain to pay these exit awards.

[01:04:15] Speaker 04:
I wonder if you have any update on any progress in that.

[01:04:19] Speaker 07:
So that's correct.

[01:04:20] Speaker 07:
The Commission's deliberations on this are still ongoing.

[01:04:23] Speaker 07:
Spain has notified all of these awards to the Commission and unless and until the Commission renders its decision, Spain is not permitted to pay them under EU law.

[01:04:34] Speaker 04:
And I had also asked Ms.

[01:04:35] Speaker 04:
Harris this, but what's your position on whether this court is prohibited by Akhmeya and Khamstray from applying EU law or why we're not in our FSIA determination?

[01:04:53] Speaker 07:
So with respect to your FSIA determination, the question, of course, is whether an arbitration agreement exists.

[01:04:59] Speaker 07:
And the Court of Justice has spoken clearly on this.

[01:05:01] Speaker 07:
You are not being asked to do anything other than to take notice of what the Court of Justice has said and to apply that as a question of fact in determining whether the agreement exists as a question of jurisdictional fact.

[01:05:16] Speaker 04:
Although, for example, the EU has not characterized

[01:05:22] Speaker 04:
It's ruling in terms of the capacity of Spain.

[01:05:27] Speaker 04:
And we would have to be doing something interpretive, not just accepting some kind of legal fact and applying it.

[01:05:33] Speaker 04:
But that's not in violation of those very decisions.

[01:05:38] Speaker 07:
No, I think, Your Honor, I think that to understand why this is a question of capacity, I think the reason why the Court of Justice did not refer to it in those particular terms is because this really is a question that is sort of inherent to how the Court of Justice conceives of the EU treaties.

[01:05:57] Speaker 07:
It's useful to remember that when EU member states join the union,

[01:06:01] Speaker 07:
They are transferring certain parts of their sovereignty to the Union member states assume obligations.

[01:06:08] Speaker 07:
That and and they agree that the EU treaties will have primacy over their national law and other international agreements and that brings you back to articles 344 and 267 those are very much.

[01:06:19] Speaker 07:
deeply ingrained, and as a matter of the way that the EU is structured, when EU member states join the union, they essentially give up their ability to agree to anything that would be contrary to the EU treaty.

[01:06:32] Speaker 07:
So it is very much a question of power and capacity, even though the Court of Justice did not use that particular term of art.

[01:06:43] Speaker 05:
Judge Rogers, did you have any other questions?

[01:06:46] Speaker 01:
No.

[01:06:48] Speaker 01:
Thank you.

[01:06:53] Speaker 01:
And now we'll hear for the United States as amicus, Sharon Swingle from the Department of Justice.

[01:06:59] Speaker 00:
Thank you, Your Honors, and thank you for the court's invitation to be heard on the issues presented.

[01:07:04] Speaker 00:
I'd like to make just three basic points.

[01:07:07] Speaker 00:
First is that in determining whether a court has jurisdiction over a foreign state under the FSIA's arbitration exception, court must make an independent determination regarding the existence of an arbitration agreement.

[01:07:21] Speaker 00:
I think that is a legal principle that is clear from this court's cases, which treat the existence of the arbitration agreement as a jurisdictional fact that must be established.

[01:07:32] Speaker 00:
In Belize, for example, the court evaluated whether the prime minister lacked authority to enter into the arbitration agreement.

[01:07:39] Speaker 00:
In Ecuador, the court held that a district court erred when it failed to make that determination as part of its jurisdictional analysis.

[01:07:47] Speaker 00:
And in the middle of the court reviewed whether Romania's ascension to the European Union

[01:07:51] Speaker 00:
nullified its agreement to arbitrate.

[01:07:53] Speaker 00:
Your honor asked Judge Pillard about whether any of those rules applied, EXID rules, and Mkula, of course, that was EXID arbitration.

[01:08:03] Speaker 00:
But I would note that Belize also involved arbitration under rules that gave the arbitral tribunal authority to conclusively decide its own jurisdiction and to conclusively decide the existence and validity of the arbitration agreement.

[01:08:19] Speaker 00:
And yet this court, nevertheless, independently reviewed that.

[01:08:23] Speaker 08:
But you do acknowledge there's a difference between deciding if there's an agreement and whether it's a question of arbitrability, because that seems to be... We do, Your Honor.

[01:08:31] Speaker 00:
And we understand that to be the distinction the court drew in Stillex.

[01:08:34] Speaker 00:
And I think that same distinction flows from the arbitration cases that the court looks to.

[01:08:40] Speaker 00:
In district number one, for example, the court recognized that the question of formation was one that could not be delegated to the arbitrator to decide and was necessarily for the court.

[01:08:53] Speaker 08:
So it doesn't seem like your position would be inconsistent with the view that there is an agreement based on the ECT and the

[01:09:05] Speaker 08:
I guess what we said in Chevron's Felix, we have this treaty, we have an award, you know, we have an agreement by the investor under the terms of the treaty to arbitrate.

[01:09:17] Speaker 08:
Your position is not inconsistent with that.

[01:09:19] Speaker 08:
The agreement is the ECT.

[01:09:21] Speaker 00:
We do not take a position on whether in fact there is a valid agreement here.

[01:09:27] Speaker 00:
I do want to take issue- Under the ECT?

[01:09:30] Speaker 00:
Yes, but I do want to take issue with one point

[01:09:34] Speaker 00:
In our understanding, the ECT is not itself an agreement to arbitrate.

[01:09:39] Speaker 00:
And I think just an example will establish why that's so.

[01:09:43] Speaker 00:
For example, I do not think a foreign state that is a party to the ECT could invoke arbitration against the wishes of an investor.

[01:09:53] Speaker 00:
We understand the ECT to be a standing offer to arbitrate.

[01:09:57] Speaker 08:
Correct.

[01:09:58] Speaker 08:
It would be in combination with the acceptance by the investor and then the arbitration award under our case law.

[01:10:03] Speaker 04:
And do you have a position on whether the ECT is an agreement for the benefit, an agreement to resolve issues by arbitration for the benefit of others?

[01:10:18] Speaker 00:
So again, we don't understand the ECT itself to be an agreement to arbitrate.

[01:10:25] Speaker 04:
I'm asking the specific question now that the FSA has its own language.

[01:10:30] Speaker 00:
Yes.

[01:10:30] Speaker 00:
And I want to look to that.

[01:10:32] Speaker 00:
It's again, that is that that description of which may arise to enforce an agreement made by the foreign state with or be for the benefit of a private party to arbitrate.

[01:10:48] Speaker 00:
And again, I think that

[01:10:50] Speaker 00:
is envisioning an arbitration agreement.

[01:10:53] Speaker 00:
I think that is the jurisdictional fact.

[01:10:54] Speaker 00:
But why isn't an agreement among the contracting parties to arbitrate?

[01:10:58] Speaker 00:
Because I think in some instances, you can have third party enforcement of an arbitration agreement.

[01:11:04] Speaker 00:
A third party beneficiary of the arbitration agreement might.

[01:11:07] Speaker 04:
And why isn't that what we have here?

[01:11:09] Speaker 00:
So again, we're not taking a position on the bottom line of whether there is in fact an agreement to arbitrate here.

[01:11:17] Speaker 03:
Though could I just clarify one thing in my own mind when the United States, in its first point, that at least as to the FSIA, the district court, faced with an enforcement petition, must make an independent determination that there is an arbitration agreement.

[01:11:41] Speaker 03:
By that, I assume that the United States is saying it's not enough

[01:11:47] Speaker 03:
with district court to defer to an EU arbitrator's conclusion?

[01:11:56] Speaker 00:
That is absolutely correct, Your Honor.

[01:11:57] Speaker 00:
We think the court needs to make its own independent determination.

[01:12:01] Speaker 03:
Does that mean in the nature of a summary judgment proceeding potentially on maybe a trial?

[01:12:10] Speaker 00:
If there are disputed jurisdictional facts, potentially, yes.

[01:12:14] Speaker 00:
You know, I think generally it would be our view that this would likely be legal issues to be decided.

[01:12:20] Speaker 03:
Yes, I understand, but I just want to understand where we're going here potentially.

[01:12:27] Speaker 03:
Depending on the evidence, it may not be possible to resolve this matter.

[01:12:34] Speaker 03:
Simply our procedural rule 56.

[01:12:39] Speaker 00:
And that's possible, Your Honor, as is typically the case in FSIA cases.

[01:12:44] Speaker 00:
if there are disputed questions of fact that are necessary to be resolved to address the question of whether a particular exception to foreign sovereign immunity applies.

[01:12:53] Speaker 03:
So do you know, and there's no reason you should necessarily, whether or not throughout the world when a party has an award and seeks its enforcement

[01:13:12] Speaker 03:
there are independent determinations as to whether or not that party is properly before the court, and there is no deference as to whether or not the agreement on which it is seeking exists.

[01:13:27] Speaker 00:
So I do not know, Your Honor, but I think that is unsurprising.

[01:13:30] Speaker 00:
And I would just, to return to the ICSID convention,

[01:13:34] Speaker 00:
I think it's clear that the exit convention sets out a framework for arbitration, but it is not an agreement among states to waive their sovereign immunity.

[01:13:44] Speaker 00:
That's clear from the convention itself, which references sovereign immunity only to make explicit that it is not abrogated by the convention.

[01:13:52] Speaker 00:
And it's clear from Article 54, which provides that a state party with a federal constitutional structure like ours agrees to enforce an arbitration agreement

[01:14:04] Speaker 00:
as if it were a final judgment of the courts of a constituent state.

[01:14:08] Speaker 00:
So under US law, that requires that there be a basis for subject matter jurisdiction under the FSIA.

[01:14:14] Speaker 00:
And I would note that the convention was implemented domestically through 22 USC 1605A, which doesn't itself abrogate sovereign immunity and doesn't provide an independent basis for jurisdiction over a foreign state.

[01:14:27] Speaker 00:
That's governed solely by the FSIA.

[01:14:30] Speaker 04:
There's an argument that's that immunity is not abrogated with respect to execution and the Investors Council points out that the limits of that abrogation imply that the immunity may well be abrogated in their view is abrogated with respect to

[01:14:49] Speaker 04:
you know, recognition and enforcement.

[01:14:52] Speaker 00:
So I think both textually, that's a dramatic overreading of the convention to take by negative implication that the parties meant to waive sovereign immunity.

[01:15:01] Speaker 04:
Certainly doesn't expressly preserve it, except with respect to execution.

[01:15:04] Speaker 00:
Well, I don't think it's consistent with Article 54 either, because the obligation to enforce an arbitration award as if it were a final judgment of the courts of constituent state and vision enforcement under domestic law, which in this case incorporates

[01:15:18] Speaker 00:
you know, whatever you need to do to show that sovereign immunity doesn't apply.

[01:15:22] Speaker 00:
And I would also just point to the legislative history of 1605A, which was the implementing legislation.

[01:15:28] Speaker 00:
Obviously, the legislative history strongly suggests that it was understood that the convention was not waiving sovereign immunity.

[01:15:36] Speaker 00:
If you take a look at the Second Circuit's decision in Mobile Cerro Negro, it outlines that legislative history.

[01:15:42] Speaker 00:
But I also think

[01:15:43] Speaker 00:
It's not the kind of clear statement we would expect to constitute a waiver of sovereign immunity from suit.

[01:15:49] Speaker 00:
Certainly that would not be sufficient to waive U.S.

[01:15:52] Speaker 00:
sovereign immunity.

[01:15:52] Speaker 04:
Going back to the arbitration exception, what about exit and the full faith and credit clause?

[01:15:58] Speaker 04:
You say in your brief that dismissing for lack of jurisdiction would not run afoul of the exit full faith and credit obligation.

[01:16:08] Speaker 04:
But is that, I mean, doesn't the full faith and credit encompass or effectuate issue preclusion, client preclusion, if there's a jurisdictional issue that was decided by the exit panel?

[01:16:25] Speaker 00:
I think the court needs to have jurisdiction in order to exercise any power over a foreign state, right?

[01:16:31] Speaker 00:
The subject matter jurisdiction inquiry under the FSIA is a threshold question of this court's authority.

[01:16:37] Speaker 00:
Again, under exit article 54, you know, our obligation is to enforce the arbitral award in the same way that we would enforce a judgment of a constituent state.

[01:16:49] Speaker 00:
And that, too, under federal law would require finding a plenary basis for jurisdiction under the FSIA at the threshold.

[01:16:58] Speaker 00:
Now, on the merits, certainly the court would not be

[01:17:01] Speaker 00:
reconsidering, assuming it had jurisdiction to enforce, would not be reconsidering the merits of the arbitral award.

[01:17:08] Speaker 00:
But that is a different inquiry, I think, from the subject matter jurisdiction inquiry.

[01:17:12] Speaker 04:
So if an investor in Switzerland decided

[01:17:18] Speaker 04:
We are going to enter into an arbitration agreement and we are going to give the arbitrators the authority to decide whether we have agreed.

[01:17:37] Speaker 05:
whether we have an arbitration agreement, and then to decide under it.

[01:17:41] Speaker 04:
And the arbitrators say, yes, you have an agreement, and yes, you've decided under it.

[01:17:45] Speaker 04:
We as a US court enforcing that against Switzerland could not credit the conclusion in that award as to the existence of an agreement.

[01:17:55] Speaker 00:
On the merits, certainly, but as conferring subject matter jurisdiction on this court, no.

[01:18:02] Speaker 00:
And I think that that follows necessarily from this court's prior decisions.

[01:18:06] Speaker 00:
In Belize itself, as I mentioned, arbitration took place under rules that gave the jurisdictional, gave the arbitral panel the authority to decide conclusively disputes about the existence and validity of the agreement.

[01:18:21] Speaker 04:
And what about Chevron and Sticlos?

[01:18:23] Speaker 00:
Well, I think there's this basic distinction that we've drawn between the existence of the agreement and questions about arbitrability.

[01:18:32] Speaker 00:
And we understand Chevron and Stilix to be

[01:18:36] Speaker 00:
based on that distinction.

[01:18:37] Speaker 04:
And finding the existence of agreement based on what?

[01:18:42] Speaker 00:
Well, I think independently examining, for example, in Belize, the court looked to whether the governmental official, in fact, had authority to enter into a binding agreement to arbitrate.

[01:19:00] Speaker 05:
That's Belize.

[01:19:01] Speaker 05:
But Chevron, Stiklis, I mean, they're

[01:19:05] Speaker 04:
Where do you see them determining that there is an agreement to arbitrate?

[01:19:09] Speaker 00:
So in Chevron, the court held that the district court had in fact determined that there was an agreement to arbitrate, right?

[01:19:19] Speaker 00:
And based on the treaty that offered arbitration acceptance by the court, the district court had not understood itself to be making that determination as part of the jurisdictional inquiry, but it had in fact determined that there was a valid

[01:19:35] Speaker 00:
agreement and still ex the court simply decided that it was a question of the scope of the arbitration agreement.

[01:19:40] Speaker 00:
It wasn't a dispute about the existence of the arbitration agreement itself.

[01:19:45] Speaker 08:
Can you address the injunction, please?

[01:19:47] Speaker 00:
I'd like to, Your Honor.

[01:19:49] Speaker 00:
I will say in the view of the United States, this is an extraordinary set of injunctions that Judge Chuckin entered.

[01:19:56] Speaker 00:
We are aware of no other instance in which a court has enjoined a foreign sovereign from pursuing litigation in a foreign court.

[01:20:04] Speaker 00:
I want to

[01:20:05] Speaker 00:
turn if I can, Judge Pan, to your earlier question about why this wasn't just like Lakers Airways.

[01:20:11] Speaker 00:
Because in the United States' view, what's relevant here is the circumstances presented and the real balancing of interests here that make clear what an extraordinary affront to international comedy this is.

[01:20:25] Speaker 00:
In Laker Airways, it was a junction against a private entity, and I think that's extremely significant.

[01:20:31] Speaker 00:
Obviously, the affront to sovereign dignity is

[01:20:34] Speaker 00:
greatly heightened when you're talking about enjoining a foreign state itself.

[01:20:38] Speaker 00:
But in addition, the court in that case was applying, being asked to apply domestic substantive rules of decision to govern the conduct of entities operating in this country whose operations were alleged to be in violation of domestic law to the serious detriment of both the functioning of United States markets and

[01:21:00] Speaker 00:
US consumers.

[01:21:02] Speaker 00:
Here, this is a far cry from that.

[01:21:05] Speaker 00:
The underlying arbitration here involves arbitration between a foreign state, a foreign national from an EU member country addressing questions of EU law.

[01:21:15] Speaker 00:
The United States here is acting solely as an enforcement arm of an arbitral tribunal.

[01:21:21] Speaker 00:
And I would just add, you know, obviously we have grave concerns about the propriety of

[01:21:28] Speaker 00:
coercive measures like injunctions against foreign states.

[01:21:31] Speaker 00:
The law of many foreign countries do not allow for such orders to be entered.

[01:21:36] Speaker 00:
Countries rightly think that it is a violation of their sovereignty.

[01:21:41] Speaker 00:
And obviously, we have concerns about the reciprocal treatment of the United States.

[01:21:45] Speaker 08:
Is it your position, though, that it isn't ever a situation in which the United States would sanction or approve of an anti-suit injunction against a foreign sovereign?

[01:21:58] Speaker 00:
Where do we draw that line?

[01:21:59] Speaker 00:
We have not taken the position that it would never be appropriate.

[01:22:02] Speaker 00:
I think the question has not been squarely presented, but certainly both in this case and in the BAE case we cite, it was the government's view that injective relief would not have been appropriate.

[01:22:14] Speaker 00:
We don't think it was appropriate here.

[01:22:16] Speaker 08:
So if I could give you a hypothetical, we do have an amicus brief from a party called Mole Hungarian Oil.

[01:22:26] Speaker 08:
I don't know if you've read it, but it's supposed to illustrate the importance of the exit framework for ensuring that justice is done to investors when a nation decides they want to get out of a deal and assume this nation is doing it in bad faith.

[01:22:43] Speaker 08:
Because in this amicus brief, it recounts how Croatia steps to get out of an investment agreement

[01:22:50] Speaker 08:
with Mol Hungarian Oil, which included relying on false information, criminally prosecuting and imprisoning one of the officers of the Investor Corporation.

[01:23:01] Speaker 08:
And in spite of all that, however, Mol Hungarian Oil was able to get an arbitration award from the ICSID framework and neutral arbitrators

[01:23:14] Speaker 08:
found that Croatia was acting in bad faith, that these were false, these were lies and awarded an arbitral award to mole Hungarian oil.

[01:23:23] Speaker 08:
And this is supposed to illustrate why ICSID is so important.

[01:23:27] Speaker 08:
So what if Croatia had sued mole Hungarian oil in Hungary to prevent that company from availing itself of the benefits of ICSID?

[01:23:39] Speaker 08:
Would comedy say we can't grant an anti-suit injunction under such a circumstance?

[01:23:47] Speaker 00:
So again, we're not taking any hard and fast position that it would never be appropriate.

[01:23:51] Speaker 00:
And of course, I can't speak to the rasty or propriety of the facts in that hypothetical.

[01:23:57] Speaker 00:
Let's assume that they're true.

[01:23:58] Speaker 08:
I'm just wondering if there is room for an anti-suit injunction under narrow circumstances where there's apparent bad faith or something that indicates there would be an injustice.

[01:24:08] Speaker 00:
I would say, I think the circumstances presented here are a far cry from circumstances that would demonstrate bad faith.

[01:24:15] Speaker 08:
Are you getting my hypothetical?

[01:24:16] Speaker 00:
Well, and I want to just point out something that I think is important.

[01:24:20] Speaker 00:
Even in BAE, you know, there you had the Korean government going into Korean courts seeking relief under their own law, you know, where you had every reason to think that that was a

[01:24:32] Speaker 00:
particularly favorable forum for the home country to be litigating in here different kind of case because those are sort of parallel proceedings.

[01:24:40] Speaker 08:
This is a suit to stop the U.S.

[01:24:42] Speaker 08:
proceedings.

[01:24:43] Speaker 08:
Well, it's also in BAE.

[01:24:45] Speaker 08:
It looks like there was an injunction which was lifted that I was reading that case this morning and it says there was an injunction entered which was lifted.

[01:24:53] Speaker 00:
The district court, ultimately, when it came before this court, there was no injunction in place.

[01:24:58] Speaker 08:
Correct.

[01:24:58] Speaker 08:
But earlier in the proceedings of that case, you said there never has been one.

[01:25:02] Speaker 08:
It looks like there was one in that case.

[01:25:04] Speaker 00:
I misspoke, Your Honor.

[01:25:08] Speaker 00:
I think there's every reason to think that the EU courts, where these proceedings are taking place,

[01:25:16] Speaker 00:
would have no reason to be unduly favorable to Spain, right?

[01:25:20] Speaker 00:
Spain has gone into the home court of the investor to try and get that court, which is under the EU rubric and framework to decide questions of EU law.

[01:25:32] Speaker 08:
want to opine on what the motivations of the EU courts are or anything like that.

[01:25:36] Speaker 08:
But I thought that the whole reason for exit was to ensure that there would be a neutral arbiter, that investors don't have to go before national courts.

[01:25:47] Speaker 08:
they get to go before international arbiters.

[01:25:50] Speaker 08:
And the United States is a signatory to Ixid and has 150 cases out there with American investors availing themselves of Ixid.

[01:25:58] Speaker 08:
And doesn't the United States have an interest in making sure the Ixid framework doesn't collapse?

[01:26:03] Speaker 08:
Because if nation states can find a way to enjoin people from using Ixid,

[01:26:12] Speaker 08:
That's a threat to Ixid.

[01:26:14] Speaker 08:
And the United States is a member of Ixid and has an interest in making sure that doesn't happen.

[01:26:20] Speaker 00:
So again, Your Honor, it is true that the United States is a member of Ixid.

[01:26:25] Speaker 00:
I think that the United States' interest in acting purely as an enforcement court for an Ixid arbitral award is not the same kind of interest that this court had before it in Laker Airways, where even there, where the injunction ran purely against a private entity

[01:26:43] Speaker 00:
the court recognized that it was an extraordinary circumstance, but that in that case in particular, the domestic forums interest in adjudicating questions of U.S.

[01:26:54] Speaker 00:
law to apply to regulate conduct of companies, join businesses in this country and availing themselves of the legal protections in this country.

[01:27:02] Speaker 08:
I think that's my question is whether United States is interest in upholding the framework is something similar or akin to, you know,

[01:27:11] Speaker 08:
this interest in US law.

[01:27:13] Speaker 00:
We do not see the interest as the same.

[01:27:15] Speaker 00:
And I would point out that this is not merely a hypothetical circumstance in which an injunction against litigation could harm our foreign relations.

[01:27:25] Speaker 00:
But we have no reason to think that is manifest.

[01:27:28] Speaker 00:
What we have here are statements.

[01:27:32] Speaker 00:
It's not purely hypothetical that the injunctions here are harming our foreign relations and our relations with our international partners.

[01:27:41] Speaker 00:
We have statements from the EU here about the interference with the resolution of complex questions of law that the injunctions pose.

[01:27:50] Speaker 00:
We have the European Union and relevant foreign sovereigns have raised diplomatic concerns directly with the State Department.

[01:27:58] Speaker 00:
I think they all just reflect the significant affront to foreign relations that those injunctions have caused.

[01:28:06] Speaker 08:
Is there room for a very narrow path to upholding an injunction like this?

[01:28:11] Speaker 08:
Because these are very specific circumstances where the foreign case is one which is directly targeted at stopping jurisdiction in a US court.

[01:28:21] Speaker 08:
It's not just like a parallel proceeding based on the same facts.

[01:28:24] Speaker 08:
The purpose of these suits brought by Spain is to stop the

[01:28:31] Speaker 08:
this ongoing legal proceeding in the United States.

[01:28:34] Speaker 08:
And it's under circumstances where these investors won't get to, I guess, have the benefits of ICSA or probably have their awards at all, because we know how the EU feels about these awards.

[01:28:49] Speaker 08:
It just seems that it leaves the investors in a difficult place.

[01:28:53] Speaker 08:
It seems to me that in Laker,

[01:28:55] Speaker 08:
um, airways.

[01:28:56] Speaker 08:
We said that the test is we have to examine the equitable circumstances to determine if, um, the attitude injunction is required to prevent an irreparable miscarriage of justice.

[01:29:06] Speaker 08:
And I don't know how this all balances out because I do understand that this is different from Laker Airways because we're talking about a sovereign and I just don't know, you know how that always it just seems that there are also other circumstances here that aren't considered in Laker Airways.

[01:29:21] Speaker 00:
So

[01:29:22] Speaker 00:
I think it's not just that it's a foreign sovereign here that makes this case different from Laker Airways.

[01:29:28] Speaker 00:
I do think the nature of the domestic court's interest is reduced here.

[01:29:31] Speaker 00:
And I would just, if I can, Judge Pan, it is true that the European proceedings are intended to stop the domestic litigation, but it is routinely the case that at least the practical effect that a foreign litigant who's litigating both in domestic courts and in some foreign proceeding

[01:29:52] Speaker 00:
is going to be to nullify the effect of the domestic judgment.

[01:29:55] Speaker 00:
That was true in BAE Airways, where Korea was looking for a Korean court adjudication that it would be able to recoup whatever payment.

[01:30:04] Speaker 08:
But those were just parallel proceedings, which is a little different in my eyes, where somebody's just trying to stop something from happening here.

[01:30:13] Speaker 00:
I think it is correct that the fact that a foreign proceeding is for the purpose of

[01:30:21] Speaker 00:
short-circuiting or stopping the domestic litigation in US court is a relevant factor.

[01:30:27] Speaker 08:
But I don't- Didn't Spain behave with a lack of comedy by doing that?

[01:30:31] Speaker 00:
I don't think it's a dispositive factor, Your Honor.

[01:30:33] Speaker 00:
And I don't want to speak for Spain, but I would assume that Spain's view is that it has been forced into arbitration that it cannot validly agree to and then put at risk of facing awards that it can't comply with

[01:30:51] Speaker 00:
consistent with EU law.

[01:30:53] Speaker 04:
But again, I- So your view is its interest, it may be using this tool, but its interest is closer to the heart of at least what it perceives to be its sovereign prerogatives than the US's interest as an exit signatory in being a forum for enforcement.

[01:31:13] Speaker 00:
Correct, particularly when the underlying questions are one.

[01:31:17] Speaker 04:
Is not US law, not US party.

[01:31:19] Speaker 04:
A treaty to which we are not.

[01:31:24] Speaker 00:
If the court has no further questions.

[01:31:26] Speaker 04:
Thank you very much and we appreciate your submitting a brief and appearing today at our invitation.

[01:31:34] Speaker 04:
And now we will hear from Mr. Boratsky for next year and nine months.

[01:31:41] Speaker 04:
Good morning.

[01:31:42] Speaker 10:
Good morning.

[01:31:43] Speaker 10:
May it please the court.

[01:31:44] Speaker 10:
I'd like to start with the ICSID issue.

[01:31:47] Speaker 04:
I was hoping that you were going to pronounce your name so that I could see that I pronounced it.

[01:31:50] Speaker 10:
No, you got it correctly.

[01:31:53] Speaker 10:
I'd like to start, if I could, with the ICSID waiver issue, but in my time also, of course, address the arbitration exception as well.

[01:32:02] Speaker 10:
Ixid is an extraordinarily broad convention.

[01:32:06] Speaker 10:
Spain's position in this case would effectively tear down the Ixid regime without regard for the US's own obligations under Ixid, which the United States recognized, for example, in its filing in the Second Circuit in the Mobile Saro case.

[01:32:24] Speaker 10:
There's jurisdiction here under the waiver exception because by ratifying the exit convention, Spain waived immunity to exit award enforcement actions in member states courts.

[01:32:33] Speaker 10:
It would create a circuit split with the Second Circuit in Blue Ridge to hold otherwise.

[01:32:37] Speaker 10:
It would also be at odds with the Australian High Court's decision, which followed Blue Ridge to hold otherwise.

[01:32:44] Speaker 10:
The ICSID Convention is a unique treaty that governs disputes with foreign states and waives by its terms immunity to award enforcement in courts of member states.

[01:32:54] Speaker 10:
We get that first from the text, if you walk through the text of ICSID.

[01:32:58] Speaker 10:
Article 25.1 of ICSID talks about how the jurisdiction of the center shall extend to any legal dispute arising directly out of an investment between a contracting state and a national of another contracting state.

[01:33:11] Speaker 10:
So from the outset, ICSID is contemplating disputes against or involving contracting states.

[01:33:18] Speaker 10:
Article 41.1

[01:33:20] Speaker 10:
Again, a very broad provision talks about how the tribunal shall be the judge of its own competence.

[01:33:25] Speaker 10:
And Article 41.2, that includes that any objection by a party to the dispute that the dispute is not within the jurisdiction of the center shall also be considered by the tribunal.

[01:33:36] Speaker 10:
So the tribunal decides its own jurisdiction that's delegated to the tribunal.

[01:33:40] Speaker 03:
Under Article 53- So how fast would you respond, if you would counsel, to the arguments that we heard this morning?

[01:33:48] Speaker 03:
Because certainly through Judge Pan's question, you got the notion that the court has been reading the plain language.

[01:33:58] Speaker 03:
But we're told that there were a lot of understandings.

[01:34:02] Speaker 03:
There were a lot of assumptions.

[01:34:05] Speaker 03:
Everybody knew.

[01:34:06] Speaker 03:
And of course, now we have this more recent statement by 26 sovereigns.

[01:34:14] Speaker 03:
What is going on here?

[01:34:16] Speaker 03:
Can you help us understand?

[01:34:18] Speaker 10:
Judge Rogers, I don't think that any of those arguments go to an understanding about exit.

[01:34:25] Speaker 10:
I don't think there is any argument that the terms of exit mean anything other than what they say, including that the award is going to be binding on the parties and that every contracting state has to recognize an award and treat it as if it were a final judgment of a court in that state.

[01:34:42] Speaker 03:
Correct, but user and counsel take us through articles

[01:34:46] Speaker 03:
saying that there is language here that limits that understanding that not only was commercial arbitration not at that point at that time, but the economic aspect of what's going on has changed dramatically since that period immediately after World War I. So

[01:35:14] Speaker 03:
Your position is that those limiting articles need to be read, how?

[01:35:24] Speaker 10:
So Judge Rodgers, I think that those arguments go to the language of the ECT rather than to the language of exit.

[01:35:32] Speaker 04:
It's an agreement to go into exit.

[01:35:34] Speaker 04:
And I think that's really where the action is.

[01:35:36] Speaker 04:
And it feels like the parties are sort of ships passing in the night on that.

[01:35:42] Speaker 10:
So I don't think we're ships passing because I think there are two distinct grounds on which the district court had jurisdiction.

[01:35:50] Speaker 10:
The waiver exception doesn't require you to look at the ECT because the waiver is by entering the exit convention.

[01:36:00] Speaker 10:
And the reason that I was marching through the text of the exit convention

[01:36:03] Speaker 10:
is that I don't think there can be any dispute that that text waves immunity as to enforcement of Ixid awards, including in the courts of any member state, which under 1650A includes courts of the United States.

[01:36:21] Speaker 10:
Then there's the arbitration exception.

[01:36:26] Speaker 10:
Under the arbitration exception, a few points on this.

[01:36:30] Speaker 10:
First,

[01:36:31] Speaker 10:
This court's cases in Chevron and Stillex set forth the framework, and not just the framework, but in Stillex dealing with the ECT specifically for how to determine whether there's jurisdiction under the arbitration exception.

[01:36:46] Speaker 10:
Stillex tells us that producing copies of the ECT, the notices of arbitration, and the tribunal's decision show that the arbitration exception applies, and that's exactly what happened here.

[01:36:57] Speaker 10:
StoX treated the ECT as the arbitration agreement because, tying this to the language of the FSIA, it is an agreement made by the foreign state, contracting parties to the ECT, with or for the benefit of private parties, which is again what we have here.

[01:37:16] Speaker 10:
The

[01:37:18] Speaker 10:
The key a key quote from from still X is that quote the tribunal's jurisdictional grant derived from all of a signature on the treaty itself.

[01:37:31] Speaker 10:
That's treating the treaty itself as the relevant agreement and under our law it is up to the tribunal to determine what the treaty means.

[01:37:39] Speaker 10:
Spain's arguments Judge Rogers about what the what the ECT means under that language in still X are for the tribunal.

[01:37:48] Speaker 10:
If you don't view the ECT as the relevant agreement, a sovereign could always frame every challenge as one of existence, saying, well, because the right kind of investor or investment wasn't involved, there was never an offer, there was never acceptance, there was never agreement.

[01:38:07] Speaker 10:
Stillex and Chevron reject that.

[01:38:09] Speaker 10:
In those cases, too.

[01:38:11] Speaker 10:
In Chevron, Ecuador said there was no agreement because the treaty's arbitration clause didn't apply to the investments.

[01:38:17] Speaker 10:
The court rejected that because that's an issue that was decided against Ecuador by the arbitrators.

[01:38:23] Speaker 04:
Within the scope, but so back to to STIL-X.

[01:38:28] Speaker 04:
You're reading, so you're reading the FSIA, I was just looking for that to put the language right in front of me.

[01:38:35] Speaker 04:
The parties to the relevant arbit, agreement to arbitrate end up being different from the parties to the dispute that's being arbitrated.

[01:38:49] Speaker 04:
If you just track through the FSIA's language, that does not bother you or how should we

[01:38:56] Speaker 10:
I think that is the FSIA's language.

[01:38:58] Speaker 10:
The FSIA's language was contemplating investment treaties.

[01:39:01] Speaker 10:
Investment treaties are different in kind from ordinary commercial arbitration agreements, where you have party A and party B signing an agreement, and then usually you're going to have party A and party B, the ones in arbitration, but even then you can have a third party that can sometimes force an arbitration agreement.

[01:39:20] Speaker 10:
Here in A6 of the FSIA, Congress is specifically contemplating this kind of agreement where you have an investment treaty among states for the benefit of private parties.

[01:39:30] Speaker 10:
When Congress added A6 to the statute, it was trying to expand the scope of enforceability of arbitral awards.

[01:39:37] Speaker 10:
And this is exactly the kind of agreement that it was contemplating.

[01:39:40] Speaker 10:
And again, Stoex and Chevron, following BG Group, treat the ECT, the investment treaty, as the relevant agreement.

[01:39:49] Speaker 04:
So you have an agreement to enforce an agreement made by the foreign state Spain for the benefit of a private party investors such as your clients to submit to arbitration all or any differences which have arisen or which may arise between the parties.

[01:40:07] Speaker 04:
So there, the parties are not the parties to the agreement made by the foreign state, because the parties to that are the other signatories of the ECT.

[01:40:15] Speaker 04:
But that doesn't bother you, that between the parties suddenly becomes the nation state and the third party beneficiary.

[01:40:24] Speaker 10:
No, because I don't think that private party at the beginning of that sentence is referring to the same parties as the ones who will be in the arbitration.

[01:40:35] Speaker 10:
Necessarily will be in the arbitration.

[01:40:36] Speaker 04:
I thought that was your position, that the benefit of a private party is the investor.

[01:40:41] Speaker 10:
Well, I'm sorry.

[01:40:42] Speaker 04:
And then it's a dispute that arises between the parties.

[01:40:45] Speaker 04:
And that is no longer the parties to the agreement by the foreign city.

[01:40:50] Speaker 04:
Correct.

[01:40:50] Speaker 04:
It is now the parties

[01:40:52] Speaker 04:
to the differences which arise.

[01:40:54] Speaker 04:
Correct, which can be the same party plus the foreign state, the foreign state.

[01:41:00] Speaker 10:
Right.

[01:41:01] Speaker 04:
And awkward that shift.

[01:41:05] Speaker 10:
I think it just reflects and this court's position that Chevron and Stoics do as well, the nature of an investment treaty where states are getting together

[01:41:15] Speaker 10:
to reach an agreement in order to ensure that the parties within those states have access to an arbitral forum.

[01:41:26] Speaker 08:
It seems to me that there are really two ways to look at whether there's an agreement to arbitrate.

[01:41:31] Speaker 08:
One is the way that Judge Pillard was just asking you about, which is just to look at the ECT and see that as an agreement among the contracting states

[01:41:41] Speaker 08:
to agree to unconditional arbitration for the benefit of private parties such as your client.

[01:41:47] Speaker 08:
And then the second way is to look at it the way we did in Chevron, which is to say there's an offer to arbitrate with any investors out there by Spain because they signed this treaty and it says I'm unconditionally agreeing to arbitrate.

[01:42:03] Speaker 08:
And then it's accepted when an investor files this notice of arbitration.

[01:42:08] Speaker 08:
And then they get an award.

[01:42:09] Speaker 08:
And those are the three jurisdictional facts we need under the FSIA.

[01:42:13] Speaker 08:
Those seem to be two different ways to say that there is an agreement to arbitrate.

[01:42:17] Speaker 08:
I'm just wondering if one is better than the other or if there's a preference as to which is more persuasive.

[01:42:24] Speaker 10:
So I think that there are two agreements to arbitrate that could be at issue, which I think is what your honor's question is getting at.

[01:42:31] Speaker 10:
There is the ECT, which is an agreement to arbitrate for the benefit of a private party.

[01:42:35] Speaker 10:
Then there's the agreement that is formed when the notice is submitted.

[01:42:39] Speaker 10:
And then that's a further agreement between the private party and the state.

[01:42:44] Speaker 10:
What this court said in Chevron and STOEX is that, consistent with the FSIA's plain language, that first agreement qualifies under the FSIA for purposes of establishing jurisdiction.

[01:42:57] Speaker 10:
And so that would be the relevant agreement to look at.

[01:43:01] Speaker 10:
And if that were not the relevant- The one among the states that- The one among the states, once you have the ECT, it's indisputable that the ECT exists, Spain signed onto it.

[01:43:11] Speaker 10:
That is the agreement that satisfies ASICs and that establishes subject matter jurists and that establishes the way some communities- Either could satisfy ASICs.

[01:43:22] Speaker 08:
Either of the two ways of looking at it.

[01:43:24] Speaker 04:
I was just going to say, well, you can answer that because I have a follow on question.

[01:43:29] Speaker 10:
I think the reason that the better way to look at it is that the ECT satisfies that agreement.

[01:43:35] Speaker 10:
The ECT satisfies the requirement.

[01:43:39] Speaker 10:
Is that otherwise, if you look at a case like Chevron or Stillex, where you have a state coming in and saying, yes, we agreed to arbitrate, but we didn't agree to arbitrate about this issue.

[01:43:53] Speaker 10:
The way that under Spain's argument, that is always going to become a question for the court rather than a scope question.

[01:44:01] Speaker 10:
Because Spain's view of the world is, Spain's view of the world is, because we didn't agree to arbitrate about X, we never made an offer to arbitrate about X, and no agreement was ever formed.

[01:44:12] Speaker 08:
But under Chevron, didn't we decide that that's just a question of arbitrability?

[01:44:15] Speaker 10:
Yes, precisely.

[01:44:18] Speaker 10:
That is a question of arbitrability.

[01:44:19] Speaker 10:
It's a question of scope for the arbitrator.

[01:44:24] Speaker 10:
And the court did that in Chevron because it viewed the ETT as the relevant agreement.

[01:44:30] Speaker 04:
But don't you have the same problem if you go back one step earlier as you're doing and saying the ECT is itself an agreement to resolve disputes by arbitration?

[01:44:48] Speaker 04:
you disavow that it's an agreement between Spain and your clients because your clients weren't parties to it.

[01:44:55] Speaker 04:
But it is an agreement to resolve disputes of arbitration.

[01:44:58] Speaker 04:
But Spain would come back and say,

[01:45:02] Speaker 04:
Yes, but it's only an agreement by EU member states to resolve disputes by arbitration with investors from outside the EU.

[01:45:15] Speaker 04:
So the very same problem of, well, what's the scope of Ecuador's offer to arbitrate arises with respect to the interpretation of the meaning of the ECT.

[01:45:30] Speaker 04:
And their view is that

[01:45:32] Speaker 04:
has to be decided by us.

[01:45:33] Speaker 04:
It's our jurisdiction.

[01:45:35] Speaker 04:
How do we resolve that?

[01:45:37] Speaker 10:
But Judge Pillar, it is the same sort of question about scope as the one that Ecuador raised.

[01:45:43] Speaker 10:
And this court in Chevron and in Stoex decided that that was a question about scope for the arbitrary.

[01:45:50] Speaker 04:
I've heard that under theorized, and I would love your help to bolster what we are bound by on that point, because

[01:45:59] Speaker 04:
If the nature of the treaty itself is, yes, Spain's a signatory, but Spain is a signatory to a treaty that, with respect to Spain, only allows non-EU investors to accept its offer to arbitrate.

[01:46:18] Speaker 04:
That's their understanding, and that's actually the dominant European court understanding.

[01:46:27] Speaker 04:
How does it get you an agreement to arbitrate?

[01:46:30] Speaker 04:
How does it transform a formation question into a scope question through the magic of adding exit and stirring?

[01:46:38] Speaker 10:
So I think there's no question that the ECT is an offer to arbitrate.

[01:46:45] Speaker 10:
If you had a Japanese investor come in, there's no question that they could accept the offer to arbitrate.

[01:46:52] Speaker 10:
The only argument that Spain is making is,

[01:46:54] Speaker 10:
We need to construe the terms of this indisputably existing agreement.

[01:47:01] Speaker 10:
The meaning of this indisputably existing agreement that takes us back to the quote that I that I read earlier from still X.

[01:47:08] Speaker 10:
The meaning of the treaty, once we agree that the treaty exists and that Spain has signed onto it, which is indisputable, the meaning of the treaty is a scope question.

[01:47:16] Speaker 10:
That's the logic of STIL-X.

[01:47:18] Speaker 10:
That's equally true whether we're talking about the kind of investment or whether we're talking about, within the language of the ECT, what it means to be a contracting state.

[01:47:30] Speaker 10:
And the language of the ECT as to what it means to be a contracting state is clear and unambiguous.

[01:47:38] Speaker 10:
There's no limitation on the offer to arbitrate with entities that are organized in accordance with the law applicable to contacting parties.

[01:47:49] Speaker 04:
That explains to you the limit that is the instinct in the entire nature of the capacity of EU and EU states to join such a treaty, which is, well, of course, privacy of EU law,

[01:48:04] Speaker 04:
Worse, this doesn't speak to our in-house, internecine, intra-EU.

[01:48:11] Speaker 08:
Isn't that foreclosed by Stoics?

[01:48:14] Speaker 10:
Well, I think it's foreclosed by Stoics.

[01:48:16] Speaker 10:
I also think it's at odds with Vienna Convention and how international law fundamentally works.

[01:48:23] Speaker 10:
Under Article 6 of the Vienna Convention, there's no question that Spain has the capacity to enter into a treaty.

[01:48:33] Speaker 01:
Article.

[01:48:38] Speaker 01:
I'm sorry, there's no under Article six.

[01:48:40] Speaker 10:
There's no question that Spain has the capacity to enter into a treaty.

[01:48:44] Speaker 10:
What Spain is doing is it's claiming to discover decades later that as a result of internal EU law, there was actually some prohibition on doing that.

[01:48:54] Speaker 10:
Under Article 46 of the Vienna Convention, a state can't use internal law in order to escape its international obligations unless the limitation was manifest and goes to a question of fundamental importance of that state's law.

[01:49:11] Speaker 08:
What's the source for that?

[01:49:14] Speaker 10:
That's the Vienna Convention Article 46.

[01:49:18] Speaker 04:
And that is their view.

[01:49:21] Speaker 04:
I mean, they, Ms.

[01:49:22] Speaker 04:
Harris, I think quite clearly is saying, oh yeah, manifests and of fundamental importance the whole time.

[01:49:28] Speaker 04:
You may have overlooked it, but that has to, I think, be their view.

[01:49:33] Speaker 04:
And I guess one question is, can that change?

[01:49:35] Speaker 04:
Could that now be the case going forward?

[01:49:38] Speaker 04:
I know it wouldn't affect your clock.

[01:49:40] Speaker 10:
I don't think it can because the Vienna Convention talks in the past tense about what was manifest.

[01:49:47] Speaker 04:
But let's say you're a new investor today, would you be on notice given the much more vocal?

[01:49:52] Speaker 10:
No, I still don't think you would because what Spain is effectively doing is trying to get out of the ECT or to amend the ECT

[01:50:01] Speaker 10:
without going through the procedures that the treaty itself provides for doing it.

[01:50:06] Speaker 10:
You simply can't do that as a matter of internal law.

[01:50:10] Speaker 04:
Well, you're characterizing it as akin to domestic law.

[01:50:12] Speaker 04:
They're characterizing it as akin to international law in the plane of the Vienna Convention itself.

[01:50:18] Speaker 04:
Isn't it somewhere in between?

[01:50:20] Speaker 04:
And if we can

[01:50:24] Speaker 04:
synthesize the EU law and the Vienna Convention and the ECT, to what in the Vienna Convention does, what is not respected by reading the EU law

[01:50:46] Speaker 04:
as a species of international law and as having the effect on the ECT that Spain says.

[01:50:53] Speaker 04:
I mean, who else does it affect?

[01:50:54] Speaker 04:
This is Europe's, however benighted, way of running its own affairs.

[01:51:01] Speaker 10:
So there's a lot packed into that.

[01:51:02] Speaker 10:
It's okay.

[01:51:03] Speaker 10:
Let me try to make three points.

[01:51:05] Speaker 10:
One, under the Vienna Convention, Article 31.1, treaties are contracts.

[01:51:11] Speaker 10:
They're construed in accordance with their ordinary meaning.

[01:51:14] Speaker 10:
When you look at the ordinary meaning of Article 26-3, it talks about how each contracting party, Spain is a contracting party, each contracting party hereby gives its unconditional consent to the submission of a dispute and so forth.

[01:51:28] Speaker 10:
There is simply no other way to read that language other than as Spain consented.

[01:51:35] Speaker 10:
Spain's argument that decades later,

[01:51:37] Speaker 10:
this limitation was discovered doesn't come close to manifestly showing that that language means something other than what it says.

[01:51:45] Speaker 04:
What law are we applying to decide the contract question in your view?

[01:51:52] Speaker 04:
Choice of law question?

[01:51:54] Speaker 10:
Well, I think in terms of reading the contract, I don't know that there is a

[01:52:01] Speaker 10:
I think you're just reading the contract according to its ordinary terms.

[01:52:03] Speaker 10:
I don't know that there's a, I don't know that EU law can read each contracting party to mean something other than each contracting party.

[01:52:13] Speaker 10:
Vienna Convention 31.1 says you just interpret contracts according to their, interpret treaties, according to their ordinary meaning.

[01:52:21] Speaker 10:
With respect to the role that EU law plays in the context of international law,

[01:52:28] Speaker 10:
There are numerous arbitration decisions by respected arbitrators and scholars that have all but uniformly rejected Spain's argument about the role of EU law relative to the ECT.

[01:52:44] Speaker 10:
I would point the court to Professor George Berman's declaration in our record, in the Next Era record, which quotes a number of these arbitral decisions and explains within the system of international law,

[01:52:58] Speaker 10:
EU law doesn't have supremacy.

[01:53:00] Speaker 10:
It doesn't have hierarchical priority over the laws of non-member states or over rules of international law.

[01:53:08] Speaker 10:
The EC itself in its amicus brief describes EU law as being akin to federal law that preempts state law within the United States.

[01:53:21] Speaker 10:
EU law doesn't dictate the meaning of the ECT as to non-EU members.

[01:53:27] Speaker 10:
So this plain language of the ECT, when we're talking about how each contracting party consents, that doesn't mean one thing when Japan looks at the ECT and another thing when Spain or an EU member looks at the ECT.

[01:53:41] Speaker 10:
The EU law doesn't dictate the meaning of this agreement for non-EU members.

[01:53:46] Speaker 10:
It is a kind of international law in the sense that it governs relations among sovereign states within Europe, but it is not international law on the same plane as the general international law that governs the interpretation of the ECT for all signatories to the energy charter tree.

[01:54:03] Speaker 04:
I'm not sure I'm entirely convinced that it has to mean the exact same thing

[01:54:08] Speaker 04:
for EU investors as for the Japanese investor, given that the two can coexist.

[01:54:16] Speaker 04:
Nobody's going to be subject to confusing or conflicting obligations in that.

[01:54:24] Speaker 10:
Well, but I think the problem is that with these multilateral treaties, whether we're talking about the ECT or whether we're talking about exit, every signatory state has an interest in ensuring that other signatory states uphold their obligations as to everybody.

[01:54:42] Speaker 10:
That's why for exit, Congress consisted with the United States' obligations under that convention passed 1650A so that federal district courts have an obligation to enforce exit awards.

[01:54:54] Speaker 10:
And that's true whether the exit award is held by a US investor or by a foreign investor.

[01:55:00] Speaker 10:
All countries that are signatories to these treaties have an interest in ensuring that other countries honor them.

[01:55:05] Speaker 10:
And so, yes, Japan does have an interest in ensuring that the ECT means the same thing for a Japanese investor as for a Dutch investor.

[01:55:14] Speaker 04:
Does it?

[01:55:15] Speaker 04:
If all the investors in Europe said, oh, we can't take advantage of that.

[01:55:18] Speaker 04:
We'll just leave without it.

[01:55:19] Speaker 04:
And Japan is like, well, we're going to take advantage of it.

[01:55:22] Speaker 04:
And the world would go on.

[01:55:24] Speaker 04:
There's nothing.

[01:55:25] Speaker 10:
Well, if the investors in Europe don't want to take advantage of it, they don't have to accept the offer on arbitrary.

[01:55:29] Speaker 10:
They can go to court if they choose to.

[01:55:31] Speaker 10:
And sure, Japan.

[01:55:32] Speaker 04:
And if they're told EU law, we're going to fine you if you do it, or we're going to shun you if you do it, or whatever, that doesn't work through the ECT.

[01:55:40] Speaker 04:
I'm just not sure that.

[01:55:42] Speaker 04:
that I see the uniformity of one, but I take it and I don't want to, I don't want to dwell on that.

[01:55:47] Speaker 04:
Can you address the full faith and credit obligation?

[01:55:54] Speaker 04:
You don't mention it when you're analyzing the arbitration exception.

[01:56:01] Speaker 04:
Is that the

[01:56:04] Speaker 04:
instrument by which the jurisdictional determination of the exit tribunal comes into our case and binds this court.

[01:56:15] Speaker 10:
So I think that's what this court recently said in velour is that 22 USC 1650 a requires a US court to give full faith and credit quote

[01:56:26] Speaker 10:
even as to questions of jurisdiction."

[01:56:30] Speaker 10:
And that's exactly what we have here.

[01:56:32] Speaker 10:
Spain pressed the very same arguments about intra-EU law to the tribunals and to the annulment committees in both of our cases.

[01:56:43] Speaker 10:
And under the ICSID convention, those arguments were considered and rejected.

[01:56:48] Speaker 10:
The whole point of the exit convention is that when that happens, the role of a member state's court is just to ensure the authenticity of the award, and then to enforce the award.

[01:57:01] Speaker 10:
Again, that was this court's decision in Volaris.

[01:57:03] Speaker 04:
And there's waiver as to enforcement and exit.

[01:57:07] Speaker 04:
There's not as I'm now switching back to waiver, but there's not as to execution.

[01:57:13] Speaker 04:
So what's what happens next if we were to?

[01:57:18] Speaker 04:
From the district court.

[01:57:21] Speaker 10:
So as to execution, the FSIA's rules about execution in 28 USC 1609 and 1610 would apply.

[01:57:30] Speaker 10:
So it's true.

[01:57:32] Speaker 10:
It exit does not

[01:57:34] Speaker 10:
The exit convention does not waive sovereign immunity as to execution.

[01:57:37] Speaker 10:
Instead, it says that the country in which the award is enforced, its rules about execution will apply.

[01:57:44] Speaker 10:
And that is supplied again by 1609 and 1610 of the FSIA.

[01:57:50] Speaker 10:
And there are various exceptions to sovereign immunity that we would be able to satisfy under the FSIA as to execution.

[01:57:59] Speaker 04:
And I just wanted to give you an opportunity to talk about the injunction.

[01:58:06] Speaker 04:
And I wonder what you think is the U.S.

[01:58:09] Speaker 04:
national interest that's promoted here by the in joining the proceedings in Europe.

[01:58:18] Speaker 10:
Sure.

[01:58:19] Speaker 10:
So it's two interests.

[01:58:21] Speaker 10:
One is

[01:58:22] Speaker 10:
the district court's interest in protecting its own jurisdiction.

[01:58:26] Speaker 10:
Congress enacted 1650A.

[01:58:29] Speaker 10:
That requires district courts to enforce exit awards.

[01:58:34] Speaker 10:
Spain's tactic here was to try to defeat the district court's jurisdiction by bringing suit in the Dutch and Luxembourgish courts.

[01:58:42] Speaker 10:
And so the one interest is in protecting federal district court jurisdiction.

[01:58:47] Speaker 10:
The other is

[01:58:48] Speaker 10:
the injunctions were necessary to uphold the United States obligations under the exit convention and under 16 50 a article 50 for one of the exit convention says that a court must recognize an exit award as binding as if it were a final judgment of a court in that state.

[01:59:06] Speaker 10:
16 50 a implements that in the U. S. As a statutory matter again, every signatory nation that signed on to the exit convention

[01:59:15] Speaker 10:
took on an obligation to ensure that those awards are enforceable, because that's really essential for the system to function.

[01:59:25] Speaker 04:
If there were no injunctions, she would still have enforced.

[01:59:28] Speaker 04:
She would have done her duty under ICCID.

[01:59:32] Speaker 04:
And the rest is beyond.

[01:59:35] Speaker 04:
I mean, ICCID doesn't have a requirement of joining other countries, other signatories, courts.

[01:59:43] Speaker 04:
The jurisdiction in this case would have been exercised.

[01:59:49] Speaker 10:
Well, but Judge Shutkin, I think, needed to enter that injunction because Spain initiated these actions in the Netherlands at Luxembourg.

[01:59:59] Speaker 10:
in order to terminate the district court proceedings and prevent Judge Shutkin from enforcing.

[02:00:06] Speaker 10:
They're seeking extraordinarily high monetary penalties against NextEra and against 9REN for every day that they don't comply with a European court injunction to dismiss the US Act.

[02:00:19] Speaker 10:
So the whole point of these European actions was actually to prevent Judge Shutkin from ever getting to the point where she could enforce.

[02:00:27] Speaker 08:
So if the anti student cases went forward in the Netherlands and Luxembourg, anything still pending here wouldn't be suspended and stopped if it prevailed, including an appeal, including any attempt to, I guess, execute a judgment.

[02:00:45] Speaker 10:
Correct, because the relief sought there.

[02:00:47] Speaker 10:
And again, Judge Shutkin did not enjoin the entire proceedings in the European courts.

[02:00:52] Speaker 10:
She allowed some aspect of those to proceed.

[02:00:55] Speaker 10:
And that was showing comedy to Spain and to the European courts.

[02:01:00] Speaker 10:
But she narrowly entered an injunction that prevented that relief in the European courts that would have interfered with US jurisdiction and prevented the suits from going forward.

[02:01:12] Speaker 08:
So what's allowed to proceed under her injunction?

[02:01:14] Speaker 10:
Declaratory relief, a determination about the state aid issue.

[02:01:18] Speaker 10:
She didn't enjoin those things from proceeding because those were not directly stopping the US action.

[02:01:26] Speaker 10:
But as this court recognized in Laker Airways, and I know that Laker Airways didn't involve a foreign sovereign, it involved a private party, but it talked about the importance of comedy.

[02:01:34] Speaker 10:
And it said that comedy gives way when a foreign lawsuit, quote, is specifically intended to interfere with and terminate a US lawsuit.

[02:01:42] Speaker 10:
That's precisely what we have here.

[02:01:44] Speaker 04:
Um, under exit, you know, cause I think you're right that the, you know, the, we do have an obligation under, under exit, but why isn't the, it correct to understand our obligation under exit to have our courthouse doors open to foreign investors seeking to enforce exit awards?

[02:02:07] Speaker 04:
What an exit requires us to read it as, um,

[02:02:13] Speaker 04:
that our courts must remove overseas obstacles to make it easier for foreign investors to find their way into and effectively use our courts.

[02:02:23] Speaker 10:
It's not about making it easier, but Article 54.1 of ICSID says each contracting state shall recognize an award and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that state.

[02:02:39] Speaker 10:
It's not just about making the U.S.

[02:02:40] Speaker 10:
courts open.

[02:02:42] Speaker 10:
If the US courts are asked to enforce, each contracting state shall do that, shall enforce.

[02:02:48] Speaker 04:
It's a little bit challenging.

[02:02:50] Speaker 04:
And this is always the case with international transactions and litigation.

[02:02:56] Speaker 04:
If the government of some country said it's investors, come and try to enforce an exit award in the United States.

[02:03:06] Speaker 04:
And the dictator of that country says to the investor,

[02:03:10] Speaker 04:
If you keep doing that case, we're going to, you know, start killing your nieces and nephews and we'll come for you next.

[02:03:17] Speaker 04:
Does the US court have to get involved in ensuring that that doesn't happen?

[02:03:24] Speaker 10:
Well, I don't know that, unfortunately, I don't know that there's much that a U.S.

[02:03:27] Speaker 10:
court could do in that situation to prevent the killings.

[02:03:30] Speaker 04:
But it's just saying it's someone else's lawlessness on their own territory with respect to their own national businesses.

[02:03:41] Speaker 04:
I'm not sure that I see that as running afoul of our

[02:03:44] Speaker 10:
I think it is a different situation where we are talking about enjoining litigation as opposed to trying to stop a killing spree.

[02:03:54] Speaker 04:
Or to threaten people because they're doing litigation.

[02:03:58] Speaker 04:
I'm sorry if I wasn't clear that the idea is unless you draw out of that litigation we are going to threaten you or take away your business license or

[02:04:07] Speaker 04:
all kinds of other activities.

[02:04:08] Speaker 04:
And I'm just, what I'm doing is trying crudely to test how much responsibility to protect our open courthouse doors we have that would involve reaching overseas into sovereign territory and sovereign function or dysfunction of other countries.

[02:04:25] Speaker 10:
So I think the limits of the US's responsibility would probably be tied to the inherent authority of a court.

[02:04:33] Speaker 10:
A court doesn't have inherent authority to prevent the dictator in some other country from engaging in the tactics that you're suggesting.

[02:04:41] Speaker 10:
I suppose you could enter an injunction.

[02:04:43] Speaker 10:
It would be completely meaningless.

[02:04:45] Speaker 10:
A court does have the inherent authority to enjoin negation in this way.

[02:04:50] Speaker 10:
That's what Laker Airways recognized.

[02:04:51] Speaker 10:
And so then the only question is,

[02:04:53] Speaker 10:
Is it any different in this case that instead of enjoining a private party, we're enjoining a soft?

[02:04:59] Speaker 08:
And- Doesn't Laker Airways also talk about a miscarriage of justice?

[02:05:02] Speaker 08:
Like, is that a standard, an irreparable miscarriage of justice?

[02:05:05] Speaker 08:
And I don't know that this necessarily falls within, the situation before us might not necessarily fall within a miscarriage of justice, such as a dictator killing people's children.

[02:05:17] Speaker 08:
But it just seems that if you play this out, it seems that

[02:05:23] Speaker 08:
the results of the EU cases seems likely to be that because I guess all the EU countries have adopted the Acmea and Comstroy reasoning that they would grant an anti-suit injunction to Spain and the investors would just not be able to collect on these awards that they

[02:05:52] Speaker 08:
have won going through this arbitral process before experts in international law, because my understanding is that the arbitrators through exit are experts, and they're also people who are placed in the pool by the member countries, including Spain.

[02:06:08] Speaker 08:
And it just seems that it would be unjust.

[02:06:10] Speaker 08:
I don't know if it's the kind of injustice that outweighs comedy, but it just seems that if

[02:06:19] Speaker 08:
if we believed that the investors had the correct reading of Ixid and they just wouldn't be able to proceed and it would be an injustice.

[02:06:30] Speaker 08:
I just don't know if that outweighs comedy interest.

[02:06:33] Speaker 10:
So I think it does outweigh comedy interest for two reasons.

[02:06:35] Speaker 10:
One is the reason that the Laker Airways Court itself gave, which is the comedy gives way when you're talking about a foreign proceeding that's specifically interfering with US litigation.

[02:06:45] Speaker 10:
The other, just to step back a minute, we have Spain coming in here talking about comedy.

[02:06:51] Speaker 10:
Laker Airways describes comedy as the mortar that holds together the bricks of the international system.

[02:06:58] Speaker 10:
What's corrosive to the international system is to have Spain come in and say that it doesn't need to honor its obligations under the ICSID convention and under the ETT.

[02:07:10] Speaker 03:
And then Spain is arguing that-

[02:07:13] Speaker 03:
of justice on behalf of the United States basically say to us, when a sovereign is involved, and we're talking about an international treaty, this is a political question.

[02:07:26] Speaker 03:
And it's the United States' position that this is going to harm the United States' interests.

[02:07:33] Speaker 03:
And that's not something for the courts to inquire into, where it's just a commercial operation as Lakers Airways.

[02:07:43] Speaker 03:
You know, it's only money.

[02:07:44] Speaker 03:
It's a different calculus.

[02:07:49] Speaker 03:
And I'm concerned, how would you respond?

[02:07:52] Speaker 03:
I mean, council had the opportunity this morning to talk about political question.

[02:07:56] Speaker 03:
She didn't, but it seems to me that's the thrust of what happens when you have a sovereign international treaty and the United States is concerned about its own interests being adversely affected.

[02:08:12] Speaker 03:
were the court to issue an injunction?

[02:08:15] Speaker 10:
Judge Rogers, I don't think that it's a political question.

[02:08:18] Speaker 10:
I think it's a question that is governed by section 1606 of the FSIA.

[02:08:24] Speaker 10:
Under section 1606 of the FSIA, foreign states that aren't immune, and if we're talking about the injunctions, we're talking about that because we've already concluded that Spain is not immune under either the arbitration exception or the waiver exception.

[02:08:37] Speaker 10:
Foreign states that aren't immune shall be treated in the same manner

[02:08:41] Speaker 10:
as a private individual under like circumstances.

[02:08:44] Speaker 10:
A district court could have enjoined a private party in like circumstances.

[02:08:48] Speaker 10:
That's precisely the Laker Airways case.

[02:08:51] Speaker 10:
Section 1606.

[02:08:52] Speaker 03:
I mean, all I'm trying to get is somebody to recognize that we can talk about injustice, et cetera, and who's really right in this litigation.

[02:09:06] Speaker 03:
But I just wonder if once you get the United States and you get foreign

[02:09:12] Speaker 03:
governments complaining to our government, doesn't the whole nature of the controversy, if it doesn't change, it certainly is different.

[02:09:27] Speaker 10:
I understand why it feels different.

[02:09:29] Speaker 10:
I don't think that it is different because under 1606,

[02:09:34] Speaker 10:
Once there's no immunity, Spain is treated like a private party.

[02:09:38] Speaker 10:
And I understand, of course, that Spain and other members of the European Union are here arguing that they shouldn't be bound by the language that they agreed to in ICID and the ECT.

[02:09:51] Speaker 10:
The Australian High Court was not moved by that when it followed Blue Ridge and recognized that the ICID convention was a waiver.

[02:10:00] Speaker 10:
And actually, under that court's law, it had to be an express waiver.

[02:10:04] Speaker 10:
And the Australian High Court found that joining the exit convention satisfied than that standard.

[02:10:10] Speaker 10:
And so I understand why it feels different, but I don't think that it is different as a legal matter, Judge Rogers.

[02:10:14] Speaker 03:
All right, thank you.

[02:10:16] Speaker 03:
And the other question I have is, and this goes beyond any obligations you have in terms of the client that you're representing now, but I just wonder from your practice, why has the High Court

[02:10:34] Speaker 03:
for the European Union not been, in my view, clear about this in terms of the position it's now presenting to this court in terms of what the EU intended when it joined the ATC.

[02:11:05] Speaker 03:
ECT and why that makes a difference here.

[02:11:09] Speaker 03:
In other words, there was a sentence thrown out to the effect that, well, until 2000, et cetera, this type of commercial litigation wasn't very active in Europe.

[02:11:31] Speaker 01:
Is that right?

[02:11:32] Speaker 10:
So I don't know as a factual matter because my practice is an appellate lawyer, not an international lawyer.

[02:11:41] Speaker 10:
So I don't know the answer to that as a factual matter.

[02:11:45] Speaker 10:
But what I can tell you, again, just going back to the Vienna Convention Article 46, is that these sorts of late discovered, too late discovered understandings of plain language of treaties, that may create an issue for Spain within the EU.

[02:12:02] Speaker 10:
It does not absolve Spain of its responsibilities under the treaty.

[02:12:06] Speaker 10:
Um, any more than to give an example, the United States has been a member of NATO for 75 years were obligated to defend foreign countries if they're attacked.

[02:12:17] Speaker 10:
If a court in the U S discovered 75 years later, actually, maybe there's a constitutional problem with spending U S taxpayer dollars to defend foreign states.

[02:12:26] Speaker 10:
No one would think that gets you out of NATO.

[02:12:28] Speaker 10:
That's an internal problem for the U S. The EU

[02:12:32] Speaker 10:
decades later has come up with an objection that they say prevents them from operating under the plain terms that they agreed to.

[02:12:42] Speaker 10:
And as a matter, there's no comedy obstacle or other obstacle to holding them to those terms.

[02:12:48] Speaker 04:
I have just a few more questions about the injunction situation.

[02:12:51] Speaker 04:
I take it, I mean, you haven't cited any other cases from a federal court of appeals affirming an anti suit injunction against a foreign sovereign.

[02:12:59] Speaker 04:
They're just, they're on again.

[02:13:00] Speaker 10:
There are other cases where courts, including this court, have upheld injunctions against foreign sovereigns in other contexts, but not this kind of anti-suit injunction.

[02:13:14] Speaker 10:
But that's also because we're not aware of any case where a foreign sovereign has tried this tactic.

[02:13:20] Speaker 10:
And this would become a common tactic if the injunction is not available.

[02:13:23] Speaker 04:
Specifically speaking, I mean, this is a lot of money at stake in the award that your clients have won.

[02:13:31] Speaker 04:
What effect would a foreign court injunction have?

[02:13:37] Speaker 04:
Wouldn't your clients just proceed and have to pay a certain amount of penalties, hoping that the district court would work quickly?

[02:13:49] Speaker 10:
The penalties are quite steep.

[02:13:52] Speaker 04:
Relative to the amount of money

[02:13:54] Speaker 04:
Your award, Stan?

[02:13:55] Speaker 10:
Well, so first of all, I can't speak to how long it would actually take to go back to the district court, conclude proceedings, and ultimately enforce these awards during which time these penalties would be mounting.

[02:14:07] Speaker 10:
But regardless, the penalties provide, at the very least, a strong incentive for our clients not to pursue the US actions

[02:14:17] Speaker 10:
which again is an interference under Laker Airways with US courts jurisdiction, which as we discussed, have the obligation to enforce.

[02:14:24] Speaker 04:
And if you, I mean, one way or the other assume that the Dutch courts are planning or might at least think they have the capacity to seek to claw back whatever you've gained here.

[02:14:37] Speaker 04:
I mean, in the end of the day, there's gonna have to be some kind of resolution of those cases.

[02:14:44] Speaker 10:
Um, after the award is paid, if there were some sort of a proceeding later to try to claw it back, that's something we would have to deal with at that time.

[02:14:53] Speaker 10:
But that is separate from that.

[02:14:54] Speaker 10:
That would that would be playing out the internal EU law issue as a matter of a matter of EU law.

[02:15:01] Speaker 10:
But that's that's a separate question from the U. S obligation to enforce the exit.

[02:15:07] Speaker 04:
My only other question is that exit itself.

[02:15:11] Speaker 04:
has this Article 64, which empowers a contracting party, including the United States, to refer another contracting party to the ICJ.

[02:15:21] Speaker 04:
So if the executive branch here is concerned that Spain or Luxembourg is violating the convention or Dutch courts, violating the convention by trying to stop the enforcement of your client's award,

[02:15:40] Speaker 04:
here, then couldn't the executive seek resolution the ICJ.

[02:15:46] Speaker 10:
I think the problem is that the US could be referred to the ICJ by another signatory state, because it's not meeting its obligations.

[02:15:54] Speaker 10:
And again, the whole nature of this convention is that