Leonard A. Sacks & Associates v. International Monetary Fund

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 9, 2021 Decided February 25, 2022

No. 21-7034

LEONARD A. SACKS & ASSOCIATES, P.C.,

APPELLANT

v.

INTERNATIONAL MONETARY FUND,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 1:20-cv-02266)

Donald H. Spence, Jr. argued the cause for appellant.

With him on the briefs was Leonard A. Sacks.

James R. Newland, Jr. argued the cause for appellee. With

him on the brief were Kiran Aftab Seldon and Renee B. Appel.

Before: HENDERSON and PILLARD, Circuit Judges, and

SILBERMAN, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge PILLARD.

PILLARD, Circuit Judge: Plaintiff Leonard A. Sacks &

Associates, P.C. (Sacks) sued the International Monetary Fund

2

(Fund or IMF) to modify or vacate an arbitration award it

obtained against the Fund. The Fund asserted its immunity,

and the district court dismissed the case. Sacks does not

dispute the Fund’s general entitlement to immunity under its

Articles of Agreement, which have legally binding effect in the

United States pursuant to the Bretton Woods Agreements Act

(Bretton Woods Act). But Sacks claims that, by including in

the parties’ contract an agreement to arbitrate under the rules

of the American Arbitration Association (AAA) and the laws

of the District of Columbia, the Fund effected a limited waiver

of that immunity to allow judicial enforcement, modification,

or vacatur of any resulting arbitration award. Sacks’ argument

makes good sense: Both the AAA Rules and D.C. law

contemplate judicial involvement in the enforcement of arbitral

awards, so arguably the contract does as well. But a waiver of

the immunity of an international organization must be explicit.

Because the Fund’s contract with Sacks expressly retains the

Fund’s immunity, reiterating it even within the arbitration

clause itself, we affirm.

BACKGROUND

The International Monetary Fund “is an international

organization whose purposes include promoting international

monetary cooperation, facilitating the expansion and balanced

growth of international trade, promoting exchange stability

among its 190 member countries, and providing temporary

financial assistance to its member countries experiencing

balance of payments difficulties.” Appellee Br. at 11. Sacks is

an experienced construction law practice with a twenty-year

history of working with the Fund even before the

representation that gave rise to this case.

In 2011, the Fund hired Sacks to negotiate disputed claims

of various contractors that worked on the renovation of the

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Fund’s Washington, D.C. headquarters. The parties’ contract

asserts the Fund’s immunity from suit and provides that any

disputes not settled by mutual agreement shall be resolved by

arbitration. As to immunity, in a clause entitled “Immunities

of the International Monetary Fund: Taxes and Disputes,” the

contract recites that Article IX of the Fund’s Articles of

Agreement, as incorporated into U.S. law by the Bretton

Woods Act, “provides that the International Monetary Fund, its

property and its assets, wherever located and by whomsoever

held, are immune from every form of judicial process.” App.

63. It goes on to say: “Accordingly, and notwithstanding

anything to the contrary in this Agreement or any documents

to which it refers, it is expressly agreed and understood that”

any disputes are to be resolved not by litigation, but by

arbitration. App. 64.

The arbitration clause, nested within that immunity-from-

taxes-and-disputes provision, states:

Any controversy [or] claim arising out of or relating

to the Contract or any breach, termination [or]

invalidity thereof, shall be settled by the mutual

agreement of the parties hereto, provided that failing

such agreement the dispute shall be finally settled by

binding arbitration administered by the American

Arbitration Association (AAA) in accordance with

its Commercial Arbitration Rules then in

effect . . . . The arbitral case shall be decided

according to the terms of the Contract and the law of

the District of Columbia. If a claim or dispute would

have been barred by a time limitation had it been

asserted in a court of the District of Columbia, then

the Tribunal shall declare the claim or dispute to be

extinguished on the merits. Each party agrees to

implement any requirements of the arbitrator or

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arbitrators directed to it in accordance with those

rules.

App. 63-64. The arbitration clause concludes with a sentence

reiterating the Fund’s immunity: “It is understood and agreed

that the submission of a claim or dispute to arbitration shall not

excuse either party from performing its obligations under the

contract, and shall not be considered to be a waiver of the

immunities of the IMF.” App. 64.

Early in 2016, in an effort to hasten the resolution of the

contractors’ claims and get the project back on track, Sacks and

the Fund amended their contract to provide for a “reverse

contingent fee” on settlements of any of twelve remaining

contractors’ claims if Sacks succeeded in wrapping them up

before the end of March 2016. App. 32. By mid-April 2016,

Sacks had settled all but two of the claims. Sacks alleged that

its legal work on the settlements saved the Fund about $45

million. Sacks contends that the Fund itself at that point

calculated Sacks’ fee under the Agreement to be $4,152,945

but paid only $2,369,000. The Fund rebuffed Sacks’ protests

of underpayment with representations “that the parties would

‘square up’ after one of the remaining final subcontractor

claims - the Halac claim - was settled.” App. 13. Once the

Halac claim settled in May 2017 and Sacks again requested an

accounting for its services, the Fund responded that it had

already paid all the fees it owed.

Per the parties’ contract, Sacks filed a demand for

arbitration with the AAA. The arbitration panel awarded Sacks

$39,918.82 plus interest in additional compensation for Sacks’

legal work on the Halac claim after the prior fee payment, but

denied Sacks’ claim of underpayment in connection with the

earlier work.

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Sacks sued the Fund in D.C. Superior Court for

modification or vacatur of the arbitration award. Sacks claimed

that the award should be vacated pursuant to D.C. Code § 16-

4423 on grounds that it “was procured by undue means,” and

“was the result of misconduct by the arbitrators.” Motion to

Modify and/or Motion to Vacate Arbitration Award of Leonard

A. Sacks & Associates, P.C. at 1, Leonard A. Sacks & Assocs.,

P.C. v. Int’l Monetary Fund, No. 2020 CA 000711 C (D.C.

Super. Ct. Jan. 30, 2020), App. 11. Sacks also claimed that the

award was “defective as [to] the calculation of the amount

awarded to Sacks and should be modified” per D.C. Code § 16-

4424. Id.

The Fund specially appeared for the limited purpose of

removing the case to federal court and asserting its immunity

from suit. The Fund sought removal under the Bretton Woods

Act, which establishes that actions by or against the IMF arise

under federal law and may be litigated in federal court. See 22

U.S.C. § 286g. That same day, it also moved to dismiss the suit

on immunity grounds pursuant to its Articles of Agreement, the

relevant provisions of which are given effect in the United

States by the Bretton Woods Act, 22 U.S.C. § 286h.

Sacks did not dispute that the Fund is generally entitled to

immunity from suit, but asserted the contract waived immunity

relating to enforcement of the arbitration clause. The contract

expressly provided for arbitration pursuant to the AAA Rules,

which contemplate courts’ entry of judgment on arbitral

awards, and D.C law, which permits judicial modification or

vacatur for certain narrowly circumscribed reasons. Rule R-

52(c) of the AAA Commercial Arbitration Rules provides that:

“Parties to an arbitration under these rules shall be deemed to

have consented that judgment upon the arbitration award may

be entered in any federal or state court having jurisdiction

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thereof.” 1 And the D.C. Code empowers courts to modify

arbitral awards on grounds such as “an evident mathematical

miscalculation,” § 16-4424(a)(1), or to vacate them if, among

other things, the “award was procured by corruption, fraud, or

other undue means,” or there was “[e]vident partiality by an

arbitrator,” § 16-4423(a). Sacks argued that, by agreeing to an

arbitration clause referencing AAA rules and D.C. law, the

Fund explicitly waived its immunity against his suit seeking the

modification or vacatur of the arbitrators’ award on grounds

those provisions contemplate.

The district court granted the Fund’s motion to dismiss,

rejecting each of Sacks’ waiver theories. See generally

Leonard A. Sacks & Assocs., P.C. v. Int’l Monetary Fund, No.

CV 20-2266, 2021 WL 1166738 (D.D.C. Mar. 26, 2021),

reprinted in App. 137-42. The court first disposed of Sacks’

argument that the Fund waived its absolute immunity by

agreeing to arbitrate under the AAA Rules. Because the

contract specifically preserves the Fund’s immunity

“notwithstanding anything to the contrary in th[e] Agreement

or any documents to which it refers,” App. 64, the court held

that it could not treat reference to or incorporation of the AAA

Rules in the parties’ contract as an express waiver. The court

likewise rejected Sacks’ argument that the Fund waived its

1

Commercial Arbitration Rules and Mediation Procedures,

AMERICAN ARBITRATION ASSOCIATION 29 (Oct. 1, 2013),

https://www.adr.org/sites/default/files/CommercialRules_Web.pdf.

See What Happens After the Arbitrator Issues an Award, AMERICAN

ARBITRATION ASSOCIATION 2, https://www.adr.org/sites/default

/files/document_repository/AAA229_After_Award_Issued.pdf

(“Under federal and state laws, there are only a few ways to challenge

an arbitrator’s award. The Federal Arbitration Act (‘FAA’) and

some state laws provide the reasons why an award can be vacated

(thrown out), modified (changed), or corrected. Those reasons are

very limited in general.”).

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immunity by agreeing to arbitrate under D.C. law. The contract

states that “[t]he arbitral case shall be decided” according to the

contract’s terms and D.C. law, App. 64, which the court read

to specify the substantive law the arbitrators should apply in

interpreting the contract, not to invite review of their awards.

Finally, the district court distinguished C & L Enterprises,

Inc. v. Citizen Band Potawatomi Indian Tribe of Oklahoma,

532 U.S. 411 (2001), on which Sacks substantially relied. The

court noted that the contract in C & L Enterprises, unlike the

contract at issue in this case, included a provision explicitly

recognizing that an arbitral award thereunder could be

“reduced to judgment” by a court. Sacks, 2021 WL 1166738,

at *3, App. 141 (quoting C & L Enters., 532 U.S. at 418-19).

The court also pointed out that the IMF contract’s identification

of D.C. law as applying in the “arbitral case” materially

differed from the C & L Enterprises contract’s choice-of-law

provision, Sacks, 2021 WL 1166738, at *3, App. 141-42,

which identified the law under which the “contract shall be

governed,” 532 U.S. at 415. Finally, the court concluded that

C & L Enterprises does not support Sacks’ waiver claim

because, “unlike the contract in that case, the one at issue here

specifically reaffirms the Fund’s immunity.” Sacks, 2021 WL

1166738, at *3, App. 142.

Sacks timely appealed.

ANALYSIS

We review an international organization’s claim of

immunity de novo. See Nyambal v. Int’l Monetary Fund, 772

F.3d 277, 280 (D.C. Cir. 2014).

We start from the shared premise that the Fund is generally

immune from suit. The Fund’s immunity is more protective

than the immunity afforded international organizations under

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the International Organizations Immunities Act (IOIA), 22

U.S.C. § 288a(b). See Nyambal, 772 F.3d at 281; see also Jam

v. Int’l Fin. Corp., 139 S. Ct. 759, 771-72 (2019) (including the

Fund in a list of international organizations with charters that

“specify a different level of immunity” from what the IOIA

provides). Article IX § 3 of the Fund’s Articles of Agreement,

which has full force and effect in the United States under the

Bretton Woods Act, 22 U.S.C. § 286h, grants the Fund absolute

immunity from suit absent its express waiver. Thus, the

Fund “enjoy[s] immunity from every form of judicial process

except to the extent that it expressly waives its immunity for

the purpose of any proceedings or by the terms of any

contract.” Nyambal, 772 F.3d at 281 (alterations in original)

(quoting Articles of Agreement, Art. IX § 3).

Sacks argues that the arbitration clause in the Fund’s

contract for Sacks’ legal services waived the Fund’s immunity

from suit for the limited purpose of allowing Sacks to

enforce—or, conversely, to modify or vacate—any resultant

arbitration award. We thus look to the contract for an

expression of any such waiver. See C & L Enters., 532 U.S. at

418; Nyambal, 772 F.3d at 282.

The Supreme Court in C & L Enterprises provided a

framework for determining whether an entity waived its

immunity by agreeing to arbitrate. The text of the contract at

issue there, like the one in this case, contained no affirmative

immunity waiver. Rather the claim there, as here, rested on the

incorporation of processes or laws that contemplate a role for

courts. The Court in C & L Enterprises addressed “the impact

of an arbitration agreement” within “a standard form

construction contract signed by the parties” on “a tribe’s plea

of suit immunity.” 532 U.S. at 414. “The question presented

[wa]s whether the Tribe waived its immunity from suit in state

court when it expressly agreed to arbitrate disputes with C & L

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relating to the contract, to the governance of Oklahoma law,

and to the enforcement of arbitral awards ‘in any court having

jurisdiction thereof.’” Id.

The Court held that “by the clear import of the arbitration

clause, the Tribe is amenable to a state-court suit to enforce an

arbitral award in favor of contractor C & L.” 532 U.S. at 414.

Several features of the contract between the Tribe and the

contractor supported that conclusion. First, the contract

“require[d] resolution of all contract-related disputes between

C & L and the Tribe by binding arbitration,” and specified that

the AAA Rules for the construction industry would govern. Id.

at 419. Those Rules, in turn, provided: “Parties to these rules

shall be deemed to have consented that judgment upon the

arbitration award may be entered in any federal or state court

having jurisdiction thereof.” Id. at 415 (quoting American

Arbitration Association, Construction Industry Dispute

Resolution Procedures, R-48(c) (Sept. 1, 2000)). Second, the

contract stated it was “governed by the law of the place where

the Project [wa]s located.” Id. The Project was in Oklahoma,

and Oklahoma law empowered courts to enforce arbitration

awards. Id. at 415, 419-20. Third, “the contract specifically

authorize[d] judicial enforcement of the resolution arrived at

through arbitration.” Id. at 422. C & L’s arbitration clause

stated that “[t]he award rendered by the arbitrator or arbitrators

shall be final, and judgment may be entered upon it in

accordance with applicable law in any court having jurisdiction

thereof.” Id. at 415. The Court was therefore satisfied “that

under the agreement the Tribe proposed and signed, the Tribe

clearly consented to arbitration and to the enforcement of

arbitral awards in Oklahoma state court,” and “thereby waived

its sovereign immunity from C & L’s suit.” Id. at 423.

Sacks relies on two key similarities between the contract

at issue here and the C & L contract. Like the C & L contract,

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the IMF contract provides that disputes “shall be finally settled

by binding arbitration administered by the American

Arbitration Association (AAA) in accordance with its

Commercial Arbitration Rules then in effect.” App. 64; see C

& L Enters., 532 U.S. at 419. And, like the AAA construction

industry rules at issue in C & L Enterprises, Rule 52 of the

AAA Commercial Arbitration Rules provides that: “Parties to

an arbitration under these rules shall be deemed to have

consented that judgment upon the arbitration award may be

entered in any federal or state court having jurisdiction

thereof.” 2 Sacks argues that by incorporating the AAA Rules

the Fund, like the Tribe in C & L Enterprises, consented to the

courts’ jurisdiction to enter judgment on an arbitration award.

And Sacks contends that waiver to allow a court to enter

judgment on an award encompasses a court’s authority to

modify or vacate the award where circumstances so warrant.

Sacks also points to the provision in the IMF contract

stating that “[t]he arbitral case shall be decided according to the

terms of the Contract and the law of the District of Columbia,”

App. 64, and notes that D.C. law contains limited provision for

the modification, D.C. Code § 16-4424, and vacatur, D.C.

Code § 16-4423, of arbitration awards. Similarly, the C & L

contract set Oklahoma law as the governing law, and

Oklahoma law provided for the enforcement of arbitral awards

in court. 532 U.S. at 415. Sacks thus argues that, by selecting

D.C. law to govern the contract, the Fund waived its immunity

from judicial modification or vacatur of an award on grounds

recognized by D.C. law.

But Sacks does not account for two key features of the IMF

and C & L contracts that differ: The IMF contract contains

express preservations of immunity that were absent from the C

2

See supra note 1.

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& L contract. And the C & L contract explicitly provided for

entry of judgment on arbitral awards, whereas the IMF contract

does not. The contract at issue in C & L Enterprises was a

standard form contract. It did not mention Tribal immunity at

all, and it went beyond deeming final any award entered

pursuant to its arbitration clause to provide that “judgment may

be entered upon it in accordance with applicable law in any

court having jurisdiction thereof.” 532 U.S. at 415. The

Fund’s arbitration clause, by contrast, appears in a section titled

“Immunities of the International Monetary Fund,”

underscoring that the Fund views resolution of disputes by

arbitration as part and parcel of preserving its immunity from

judicial process. App. 63. The IMF contract broadly affirms

that the Fund’s Articles of Agreement render it “immune from

every form of judicial process.” App. 63. And the concluding

sentence of the arbitration clause itself declares that “[i]t is

understood and agreed that the submission of a claim or dispute

to arbitration . . . shall not be considered to be a waiver of the

immunities of the IMF.” App. 64.

Despite the IMF contract’s inclusion of the kinds of cross

references to AAA Rules and state law that supported the

waiver holding in C & L Enterprises, this contract’s express

preservations of immunity and lack of any contemplation that

a court might enter judgment on the award distinguishes this

case. Indeed, although the Fund itself does not cite this

particular phrase, its contract contains a somewhat unusual

commitment that “[e]ach party agrees to implement any

requirements of the arbitrator or arbitrators directed to it in

accordance with those rules,” App. 64—perhaps

acknowledging that it is up to the parties to carry out any award

in the absence of judicial involvement. In the face of an

explicit, blanket assertion that submission to arbitration “shall

not be considered to be a waiver of the immunities of the IMF,”

App. 64, and the absence of any express contemplation of

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judicial involvement as was present in the C & L contract, we

cannot say that the Fund explicitly waived immunity even for

the limited purpose of determining the validity (or not) of an

arbitral award and reducing it to judgment.

Sacks disagrees, contending that the contract does not

actually preserve the Fund’s immunity from judicial

modification or vacatur of an arbitration award, but preserves

it only for other purposes. Sacks reads the concluding sentence

of the arbitration clause to mean that “[a]fter Sacks filed its

claim with the AAA, it was understood that the Fund’s

immunity as to all . . . issues not ‘arising out of or relating to

the Contract’ remained intact,” even as “immunity was waived

as to dispute resolution through arbitration in accordance with

the AAA Rules.” Reply Br. at 9. That explanation is

unpersuasive. Nobody would think that by agreeing to arbitrate

“[a]ny controversy [or] claim arising out of or relating to the

Contract or any breach, termination [or] invalidity thereof,”

App. 64, the Fund ran a risk of waiving its immunity regarding

issues unrelated to the contract. It makes no sense that the Fund

would restate its immunity as it did to guard against that

unlikely prospect. Rather, given C & L Enterprises, the natural

reading is that the Fund was concerned that its agreement to

arbitrate might subject it to the kinds of limited judicial review

to which arbitration awards are ordinarily subject. The Fund’s

insistence in the arbitration clause itself that it was not waiving

its immunity suffices to contradict the implication that it was.

CONCLUSION

The Fund’s entitlement to absolute immunity from suit,

together with the fact that it explicitly reaffirmed its immunity

in its agreement to arbitrate with Sacks, compels us to affirm.

It is true, as Sacks argues, that the Court in C & L Enterprises

observed that an arbitration “regime has a real world objective;

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it is not designed for regulation of a game lacking practical

consequences,” 532 U.S. at 422, and concluded the arbitration

clause before it would be “meaningless if it did not constitute a

waiver of whatever immunity” the Tribe otherwise had, id.

(quoting Native Vill. of Eyak v. GC Contractors, 658 P.2d 756,

760 (Alaska 1983)). As IMF counsel acknowledged at oral

argument, absent waiver, the Fund’s immunity from suit

entitles it to ignore an arbitration award against it. Oral Arg.

Rec. 12:27-12:31. Thus, although the IMF contract says any

disputes arising from or relating to it shall be “finally settled by

binding arbitration,” App. 64, its arbitration clause does not

actually bind the Fund to the arbitral result in any meaningful

legal sense.

But the concerns the Court expressed in C & L Enterprises

are alleviated here by the Fund’s explicit preservation of its

immunity. The assertion of immunity within the arbitration

clause itself makes a difference: Parties in Sacks’ position have

a choice whether to avoid agreeing to such terms with immune

entities like the IMF without at least a limited waiver of their

immunity, or—as Sacks did here—to contract on the IMF’s

terms. Unlike the contractor in C & L Enterprises, Sacks had

reason to believe the normal safeguards ordinarily associated

with binding arbitration had been contracted away. Cf. C & L

Enters., 532 U.S. at 422 (“And to the real world end, the

contract specifically authorizes judicial enforcement of the

resolution arrived at through arbitration.”). Absent an explicit

waiver that is not present here, we will not disturb the terms the

Fund offered and Sacks, an experienced law firm, chose to

accept.

For the foregoing reasons, we affirm.

So ordered.