Preble-Rish Haiti, S.A. v. BB Energy USA

Case: 22-20021 Document: 00516394972 Page: 1 Date Filed: 07/14/2022

United States Court of Appeals

for the Fifth Circuit

United States Court of Appeals

Fifth Circuit

FILED

July 14, 2022

No. 22-20021 Lyle W. Cayce

Clerk

Preble-Rish Haiti, S.A.,

Plaintiff—Appellee,

versus

Republic of Haiti,

Defendants,

BB Energy USA, L.L.C.,

Garnishee—Appellant.

Appeal from the United States District Court

for the Southern District of Texas

USDC No. 4:21-CV-1953

Before Higginbotham, Dennis, and Graves, Circuit Judges.

James E. Graves, Jr., Circuit Judge:

The Foreign Sovereign Immunities Act provides a foreign state’s

property with immunity from prejudgment attachment unless an exception

applies. The relevant exception in this case requires a foreign state to

explicitly waive its immunity from prejudgment attachment. 28 U.S.C.

§ 1610(d). Although this court has yet to interpret the § 1610(d) exception,

today we hold that an explicit waiver must be, well, explicit. Anything short

Case: 22-20021 Document: 00516394972 Page: 2 Date Filed: 07/14/2022

No. 22-20021

of a foreign state’s clearly expressed waiver of immunity from prejudgment

attachment will not suffice under § 1610(d). Here, however, the district court

entered a writ of attachment based on the erroneous conclusion that Haiti

and its agency waived their immunity from prejudgment attachment based

on a contract that said nothing about prejudgment attachment. We therefore

REVERSE the district court and VACATE the writ.

BACKGROUND

Plaintiff-Appellee Preble-Rish Haiti, S.A. filed this case pursuant to

Rule B of the Supplemental Rules for Admiralty or Maritime Claims in the

Federal Rules of Civil Procedure. It sought to attach assets to secure a partial

final arbitration award against the Republic of Haiti and the Bureau de

Monétisation de Programmes d’Aide au Developpement (BMPAD).

Garnishee BB Energy USA, L.L.C. admits to holding credits belonging to

BMPAD located in the Southern District of Texas.

A. Underlying Facts

In May 2020, Preble-Rish, a Haitian company, entered into three

contracts with BMPAD, a Haitian government agency, to deliver fuel. The

contracts specified that BMPAD would provide a letter of credit as payment.

BMPAD did not provide that letter, so the contracts were amended to permit

BMPAD to instead make full prepayment pursuant to an invoice Preble-Rish

submitted before each delivery. The contracts stated Preble-Rish would

make six deliveries of fuel in response to orders from BMPAD.

Relevant here, the contracts had an arbitration clause stating:

In the event of a dispute between the [BMPAD] and [Preble

Rish] under this Contract, the dispute shall be submitted by

either party to arbitration in New York. . . . The decision of the

arbitrators shall be final, conclusive and binding on all Parties.

2

Case: 22-20021 Document: 00516394972 Page: 3 Date Filed: 07/14/2022

No. 22-20021

Judgment upon such award may be entered in any court of

competent jurisdiction.

Pursuant to the contracts, BMPAD and Preble-Rish executed their

duties without issue on four deliveries of fuel. Problems arose on the fifth

delivery. To resolve these issues, on November 20, 2020, Preble-Rish sent

BMPAD a notice demanding arbitration in New York. BMPAD did not

appear in the arbitration and refused to participate. On December 22, 2020,

Haiti and BMPAD filed a petition in New York state court to obtain an order

to stay the pending arbitration with Preble-Rish. Preble-Rish opposed the

petition and filed a cross-motion to compel arbitration.

While Haiti and BMPAD’s action was pending in New York state

court, on August 6, 2021, the arbitration panel issued a partial final award of

security. The award required BMPAD to post approximately $23 million in

security.

On September 27, 2021, the New York state court denied BMPAD’s

petition to stay the arbitration and granted Preble-Rish’s motion to compel

arbitration. The order states: “It is beyond dispute that the parties freely and

unequivocally agreed to arbitrate all of their disputes in New York.” That

order was affirmed by the New York Appellate Division on April 12, 2022.

The Appellate Division stated BMPAD failed to show the arbitration clause

was invalid under Haitian law.

B. Procedural History

On June 15, 2021, Preble-Rish filed this Rule B attachment action in

the Southern District of Texas to secure any final award from the pending

arbitration and the partial final award of security. In its first complaint,

Preble-Rish asserted claims for breach of contract and unjust enrichment.

After complying with Rule B, Preble-Rish sought a writ of attachment for

property belonging to BMPAD located in the district but in the possession of

3

Case: 22-20021 Document: 00516394972 Page: 4 Date Filed: 07/14/2022

No. 22-20021

BB Energy. Preble-Rish alleged that BMPAD prepays BB Energy for fuel and

that the prepaid funds are property of BMPAD present in the district.

The district court issued the writ of attachment and Preble-Rish

served BB Energy with the writ on July 1, 2021. BB Energy promptly moved

to dismiss and argued the district court lacked jurisdiction over the complaint

based on BMPAD’s sovereign immunity.1 BB Energy also moved to vacate

the attachment because the contracts at issue were not maritime in nature

and therefore precluded admiralty jurisdiction as needed for Rule B

attachment. The district court stayed the writ to determine the subject

matter jurisdiction issue.

On August 10, 2021, the district court denied BB Energy’s motion to

dismiss because it concluded BMPAD had waived sovereign immunity by

agreeing to arbitrate disputes under the contracts. The district court also

concluded BMPAD explicitly waived its sovereign immunity from

prejudgment attachment by agreeing to provide letters of credit or

prepayment as stated in the contracts and because the property that sought

to be attached was “used for commercial activity in the United States.”

Having concluded that BMPAD waived its sovereign immunity generally and

from prejudgment attachment, the district court determined it had subject

matter jurisdiction over the case and reinstated the writ of attachment.

BB Energy did not appeal this order.

On September 3, 2021, the district court granted BB Energy’s motion

to vacate the writ of attachment. The district court concluded the contracts

1

To date, neither Haiti nor BMPAD has appeared in this case. BB Energy

nonetheless has standing to assert the sovereign immunity defense because the property it

holds qualifies as “property of a foreign state.” See Walker Int’l Holdings Ltd. v. Republic of

Congo, 395 F.3d 229, 233 (5th Cir. 2004).

4

Case: 22-20021 Document: 00516394972 Page: 5 Date Filed: 07/14/2022

No. 22-20021

were not maritime in nature and did not satisfy the requirements for

admiralty jurisdiction for Rule B attachments.

Preble-Rish filed an amended complaint2 and added claims for

maritime fraud and conversion. BB Energy moved to dismiss and again,

raised BMPAD’s sovereign immunity by arguing the new maritime tort

claims fell outside the scope of the arbitration clause and BMPAD did not

waive its immunity from prejudgment attachment. The district court

deferred ruling on the motion to dismiss and directed the parties to discovery.

BB Energy appealed and this court remanded the case with instructions for

the district court to limit discovery to the sovereign immunity jurisdictional

issue. See Preble-Rish Haiti, S.A. v. BB Energy USA, LLC, No. 21-20534, 2021

WL 5143757, at *3 (5th Cir. Nov. 4, 2021) (unpublished). On remand, the

parties agreed no further discovery was needed to resolve the issue.

On January 4, 2022, the district court denied BB Energy’s motion to

dismiss based on sovereign immunity. The district court relied on its August

10, 2021 decision to conclude that the arbitration clause waived BMPAD’s

immunity from suit. It therefore only determined whether the arbitration

clause covered maritime tort claims in the amended complaint. The court

broadly construed the arbitration clause’s waiver for disputes “under this

contract” to encompass the maritime tort claims in addition to the breach of

contract claims. The district court also applied issue preclusion as to whether

Haitian law prohibited arbitration against governmental entities and cited the

New York state court’s order denying BMPAD’s motion to stay arbitration.

Although BB Energy raised BMPAD’s sovereign immunity from

2

Preble-Rish first filed a notice of appeal and a motion for reconsideration, or in

the alternative, a motion for leave to file an amended complaint. After the district court

granted Preble-Rish leave, Preble-Rish withdrew its notice of appeal and filed its amended

complaint.

5

Case: 22-20021 Document: 00516394972 Page: 6 Date Filed: 07/14/2022

No. 22-20021

prejudgment attachment again, the district court stated it had already

decided that issue and cited its August 10, 2021 order.

BB Energy appeals the January 4, 2022 order pursuant to the collateral

order doctrine.3

DISCUSSION

This case turns on the interpretation of 28 U.S.C. § 1610(d) which

provides a limited exception to the general rule that a foreign state and its

property is entitled to sovereign immunity. That exception applies only when

“the foreign state explicitly waived its immunity from attachment prior to

judgment.” § 1610(d). Here, there was no explicit waiver. So we conclude

BMPAD did not waive its immunity from prejudgment attachment and the

district court erred in concluding otherwise.

Without this waiver, the district court did not have jurisdiction to

enter the writ of attachment against BB Energy.4 We accordingly reverse the

district court and vacate the writ.

The denial of sovereign immunity is reviewed de novo. See Frank v.

Commonwealth of Antigua and Barbuda, 842 F.3d 362, 367 (5th Cir. 2016). A

foreign state’s sovereign immunity deprives the federal courts of jurisdiction.

The Foreign Sovereign Immunities Act (FSIA) therefore “provides the sole

source of subject matter jurisdiction in suits against a foreign state.” Id.

3

Contrary to Preble-Rish’s argument that this court lacks appellate jurisdiction,

the collateral order doctrine permits review of the denial of sovereign immunity from writs

of garnishment or attachment. See Stena Rederi AB v. Comision de Contratos del Comite

Ejecutivo Gen. del Sindicato Revolucionario de Trabajadores Petroleros de la Republica

Mexicana, S.C., 923 F.2d 380, 386 (5th Cir. 1991).

4

Because we resolve this appeal on the prejudgment attachment issue, we assume

without deciding that BMPAD implicitly waived its sovereign immunity from suit generally

pursuant to 28 U.S.C. § 1605(a)(1).

6

Case: 22-20021 Document: 00516394972 Page: 7 Date Filed: 07/14/2022

No. 22-20021

(quoting Dale v. Colagiovanni, 443 F.3d 425, 427–28 (5th Cir. 2006)); 28

U.S.C. § 1604. Pursuant to the FSIA, the general rule is that foreign states

are immune from suit in American courts. 28 U.S.C. § 1604; see also Arriba

Ltd. v. Petroleos Mexicanos, 962 F.2d 528, 532–33 (5th Cir. 1992). Along with

immunity from suit generally, the FSIA provides a foreign state’s property

with immunity from attachment or execution unless an exception applies. 28

U.S.C. § 1609.

The relevant exception here is § 1610(d), which states:

The property of a foreign state . . . used for a commercial

activity in the United States, shall not be immune from

attachment prior to the entry of judgment in any action . . . if—

(1) the foreign state has explicitly waived its immunity

from attachment prior to judgment . . . and

(2) the purpose of the attachment is to secure

satisfaction of a judgment that has been or may

ultimately be entered against the foreign state, and not

to obtain jurisdiction.

This exception has three conditions: (1) the property must be used for

a commercial purpose in the United States; (2) there must be an explicit

waiver; and (3) the purpose of attachment must be to secure satisfaction of a

judgment. See Pine Top Receivables of Ill., LLC v. Banco de Seguros del Estado,

771 F.3d 980, 983 (7th Cir. 2014). BB Energy only challenges the first two

elements; it argues there is no explicit waiver from prejudgment attachment

and the credits it holds for BMPAD are not “used for commercial activity in

the United States.”

7

Case: 22-20021 Document: 00516394972 Page: 8 Date Filed: 07/14/2022

No. 22-20021

This court has not yet interpreted the § 1610(d) exception or its

requirements. We are confident, however, that the explicit waiver

requirement has not been met here.5

To interpret § 1610(d), “we begin ‘where all such inquiries must

begin: with the language of the statute itself.’” Republic of Sudan v. Harrison,

139 S. Ct. 1048, 1056 (2019) (alterations and citations omitted).

Section 1610(d) revokes sovereign immunity for a foreign state’s property “if

the foreign state has explicitly waived its immunity from attachment prior to

judgment.” The key word here is “explicitly.” This naturally and ordinarily

means in a definite and unambiguous manner. To be unequivocal, express,

clear, or plain. Dictionaries contrast “explicitly” with “not merely by

implication or implicitly.” E.g., Explicitly, Oxford Eng. Dictionary

(3d ed. June 2016).

We, like other courts, think an explicit waiver must be explicit “in the

common sense meaning of that term.” S & S Machinery Co. v.

Masinexportimport, 706 F.2d 411, 416 (2d Cir. 1983). While an explicit waiver

need not include the words “prejudgment attachment” or the like, an

asserted waiver “must demonstrate unambiguously the foreign state’s

intention to waive its immunity from prejudgment attachment.” Id. This

requires “unmistakable and plain language.” Id.

The importance of the explicit waiver requirement is also highlighted

when we compare § 1610(d) to the language used in other exceptions in the

FSIA. For instance, there are several other exceptions that permit a waiver

to be explicit or implicit. Compare §§ 1605(a)(1), 1610(a)(1) (allowing wavier

to be explicit or by implication), with § 1610(d). See also S & S Machinery, 706

F.2d at 416 (“The requirement that the waiver of immunity from

5

As for the other two requirements, we find no error in the district court’s analysis.

8

Case: 22-20021 Document: 00516394972 Page: 9 Date Filed: 07/14/2022

No. 22-20021

prejudgment attachment be explicitly made is underscored both by the plain

language of § 1610(d) and by the contrast between § 1610(d) and § 1610(a).”

(emphasis in original)).

With this understanding, we can only conclude that BMPAD did not

explicitly waive its immunity from prejudgment attachment. The only basis

for a waiver of any immunity is the arbitration clause in the contract between

BMPAD and Preble-Rish. The arbitration clause is relevant to whether

BMPAD waived its sovereign immunity from suit generally, but a waiver of

immunity from suit has “no bearing upon the question of immunity from

prejudgment attachment.” S & S Machinery, 706 F.2d at 417.

Even when we look at the arbitration clause and the contract as a

whole, we find nothing to support an explicit waiver of immunity from

prejudgment attachment. The clause does not contemplate prejudgment

attachment or any other liabilities. Nor does it mention security or letters of

credit in the context of disputes between the parties. Although Preble-Rish

and BMPAD agreed any arbitration awards would “be final, conclusive and

binding,” that language does not contemplate any specific remedy or allow

the arbitration panel to ignore the immunity from prejudgment attachment

as provided by the FSIA.

And in prior cases where this court has concluded the § 1610(d)

exception applied, the parties’ agreement has explicitly said sovereign

immunity is waived “including any immunity from the jurisdiction of any

court or from any execution or attachment in aid of execution prior to judgment or

otherwise.” Atwood Turnkey Drilling, Inc. v. Petroleo Brasileiro, S.A., 875 F.2d

1174, 1177 (5th Cir. 1989) (emphasis added); see also Mangattu v. M/V Ibn

Hayyan, 35 F.3d 205, 210 (5th Cir. 1994) (rejecting argument that agreement

to laws of another country is sufficient to find an explicit waiver); id. (“If the

subsequent law of another country in fact waives immunity, it would be an

9

Case: 22-20021 Document: 00516394972 Page: 10 Date Filed: 07/14/2022

No. 22-20021

implicit waiver . . . .” (emphasis added)). Such explicit language is absent

here.

Preble-Rish urges us to find waiver because, in the contracts, BMPAD

agreed to provide letters of credit or full prepayment, i.e., agreed to provide

security in Preble-Rish’s favor. To support this theory, Preble-Rish points to

Banco de Seguros del Estado v. Mutual Marine Office, Inc., 344 F.3d 255 (2d

Cir. 2003). In that case, the Second Circuit determined a sovereign entity

agreed to “apply for and secure delivery to [the other party] a clean

irrevocable Letter of Credit issued by a bank” and therefore demonstrated

that the “parties embraced the usefulness of letters of credit as a means of

securing their respective rights and obligations and as a means of facilitating

the transaction generally.” Mut. Marine Off., 344 F.3d at 261 (citations

omitted). The parties in that case had also agreed to arbitration and explicitly

stated the “arbitrators are relieved of all judicial formalities and may abstain

from following the strict rules of law.” Id. (internal quotation marks and

citations omitted). Although the district court accepted this theory, we are

unpersuaded.

The Second Circuit in Mutual Marine noted the arbitration clause at

issue did not explicitly authorize the arbitrator to order a letter of credit as

security against a possible final award. See id. So rather than relying on

§ 1610(d)’s demand that a waiver be explicit, the court looked to other

provisions in the agreement to infer a waiver of immunity from prejudgment

attachment. If the court needs to infer a waiver, then the waiver is not

explicit. See Pine Top, 771 F.3d at 985 (concluding a waiver that must be

discerned from contract clauses “that do not speak to orders of preanswer

security in judicial proceedings” is not explicit). And although BMPAD

agreed to provide letters of credit, the contracts in this case lack the same

generous arbitration clause that allows arbitrators to “abstain from following

the strict rules of law.” Id. Without such authorization, the contract here

10

Case: 22-20021 Document: 00516394972 Page: 11 Date Filed: 07/14/2022

No. 22-20021

simply provides for letters of credit during the underlying transaction—not

in any disputes that are ultimately submitted to arbitration. Mutual Marine is

thus distinguishable and unpersuasive on the issue before us.

CONCLUSION

To satisfy § 1610(d), an explicit waiver of immunity from

prejudgment attachment must be express, clear, and unambiguous. Anything

short of that is insufficient. Because there is no such explicit waiver in the

contract or elsewhere, the district court erred in concluding BMPAD waived

its sovereign immunity from prejudgment attachment. We accordingly

REVERSE the district court and VACATE the writ of attachment.

11