Belize Bank Limited v. Government of Belize
852 F.3d 1107, 2017 WL 1193700, 2017 U.S. App. LEXIS 5587 (2017)
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Rule of Law:
The public policy exception under Article V(2)(b) of the New York Convention, which allows a court to refuse enforcement of a foreign arbitral award, is construed narrowly and applies only where enforcement would violate the United States' most basic notions of morality and justice, not merely because foreign arbitral procedures or professional norms differ from those in the U.S.
Facts:
- On December 9, 2004, Belize's Prime Minister, Said Musa, signed an agreement for the Government of Belize to guarantee a loan made by The Bank of Belize Limited to a private health services provider.
- By 2007, the health services provider defaulted on the loan, making the Government of Belize liable for the outstanding balance.
- On March 23, 2007, the Government of Belize and The Bank of Belize Limited entered into a settlement agreement in which Belize agreed to pay the full debt.
- After the settlement agreement became public, it caused significant public protest, with citizens branding the deal as corrupt.
- Responding to the political pressure, the Government of Belize refused to make any payments to The Bank of Belize Limited as required by the settlement agreement.
- The settlement agreement contained a clause mandating dispute resolution through arbitration in London, England.
- During the arbitration proceedings, the Government of Belize objected to arbitrator Zachary Douglas, who was a member of Matrix Chambers.
- Belize's objection was based on the fact that another barrister in Matrix Chambers had, in prior and unrelated matters, advised a partial owner of the Bank and represented other interests adverse to Belize.
Procedural Posture:
- The Bank of Belize Limited initiated arbitration proceedings against the Government of Belize in London, England, under the rules of the London Court of International Arbitration (LCIA).
- During the proceedings, Belize challenged the appointment of arbitrator Zachary Douglas, but a special Division of the LCIA rejected the challenge.
- Belize subsequently withdrew from the arbitration.
- On January 15, 2013, the arbitral tribunal found Belize in breach and issued a substantial monetary award in favor of the Bank.
- After failed attempts to enforce the award in Belize, the Bank filed a Petition to Confirm Foreign Arbitration Award in the U.S. District Court for the District of Columbia.
- The district court granted the Bank's petition, confirming the award and entering judgment against Belize.
- The Government of Belize (appellant) appealed the district court's judgment to the U.S. Court of Appeals for the D.C. Circuit, with The Bank of Belize Limited as the appellee.
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Issue:
Does enforcing a foreign arbitral award violate United States public policy under the New York Convention when an arbitrator is a member of an English 'chambers' where another barrister, in unrelated past matters, represented interests adverse to one of the parties?
Opinions:
Majority - Henderson, J.
No, enforcing the foreign arbitral award does not violate United States public policy. The public policy defense under the New York Convention is exceptionally narrow and reserved for instances where enforcement would contravene the United States' most basic notions of morality and justice. Belize's argument attempts to incorrectly apply the American 'evident partiality' standard from the Federal Arbitration Act to an international award and improperly equates an English 'chambers' with an American law firm. An English chambers is a collection of independent solo practitioners who do not share client confidences or liabilities, so the rationale for imputing conflicts of interest as is done in U.S. law firms is inapposite. The court must analyze the facts as they are, recognizing the different legal structures of other nations, and cannot deny enforcement simply because the foreign system's professional norms differ from American ones. As Belize was familiar with the chambers system and failed to provide specific facts indicating improper motives on the arbitrator's part, there is no violation of fundamental U.S. public policy.
Analysis:
This decision reinforces the strong pro-enforcement bias of the New York Convention in U.S. courts, emphasizing the extremely high bar for invoking the public policy exception. It establishes that U.S. courts will not impose American-specific professional conduct rules, such as law firm-style conflict imputation, onto foreign legal structures like the English chambers system. The ruling provides greater certainty to parties in international arbitration that U.S. courts will respect the procedural and professional norms of the arbitral forum, so long as those norms do not violate fundamental principles of justice. This strengthens the finality and enforceability of foreign arbitral awards in the United States.
