Opinion
CIVIL ACTION NO. H-01-0634
January 24, 2002
MEMORANDUM AND ORDER
This action in which the Court confirmed an international arbitral award is before the Court on Petitioner Karaha Bodas Company, L.L.C.'s ("KBC's") "Motion for Declaration of `Reasonable Period of Time'" ("Motion") [Doc. # 47]. Respondent Perusahaan Pertambangan Minyak Dan Gas Bumi Negara ("Pertamina") has filed its "Opposition to KBC's Motion for Declaration of `Reasonable Period of Time'" ("Opposition") [Doc. #51]. Having considered the parties' briefs, all matters of record, and applicable legal authorities, the Court concludes that KBC's Motion should be granted.
Also before the Court are KBC's Motion for Leave to Register Judgment [Doc. # 49] and Motion for In Camera Review of Second Affidavit of Christopher F. Dugan [Doc. # 50], which will be ripe for determination by the Court after January 30, 2002.
By Order dated November 30, 2001, this Court granted KBC's motion for summary judgment confirming the December 18, 2000 final arbitral award entered in its favor against Pertamina. Final Judgment in this case was entered December 4, 2001. Pertamina timely filed a Notice of Appeal, but has not posted a supersedeas bond to stay execution of the Judgment.
The Foreign Sovereign Immunities Act ("FSIA") provides that no post-judgment attachment or execution "shall be permitted until the court has ordered such attachment and execution after having determined that a reasonable period of time has elapsed following entry of judgment . . . ." 28 U.S.C. § 1610 (c). KBC asks this Court to determine that January 15, 2002 marks the passing of a reasonable period of time following entry of the Judgment after which it should be permitted to commence execution on the Judgment.
Completeness of Motion
Pertamina first contends that KBC's Motion should be denied because KBC does not identify the specific assets it proposes to attach in satisfaction of the judgment. Pertamina' s argument overstates the scope of relief KBC seeks. KBC does not seek a writ of attachment; KBC seeks only "an order stating that execution may commence on January 15, and that as of such date a `reasonable period of time' will have passed, in satisfaction of the requirements of § 1610(c) of the Foreign Sovereign Immunities Act of 1976." Motion, at 3. A ruling from this Court as to whether a reasonable time has passed following entry of judgment satisfies one of several steps KBC must take before attempting to execute on the judgment. The reasonable time inquiry does not require findings regarding whether specific property is exempt from execution or otherwise not available for satisfaction of the judgment. There are sufficient facts in the record before the Court to rule on the limited question before it. Thus, KBC's Motion is not incomplete or premature for the specific relief sought.
The cases Pertamina cites, Trans Commodities, Inc. v. Kazakstan Trading House, S.A., No. 96 CIV. 9782 (BSJ), 1997 WL 811474, *3 (S.D.N.Y. May, 28, 1997) (FSIA prohibits issuance of an attachment of a foreign sovereign's property until after the court specifically orders attachment of the property at issue); Olympic Chartering S.A. v. Ministry of Industiy and Trade of Jordan, 134 F. Supp.2d 528, 530 (S.D.N.Y. 2001) (motion for attachment that does not identify specific assets is deficient under FSIA), are inapposite because the precise procedural issue involved in each of those cases is materially different from the one at bar.
"Reasonable Time" Determination
The Court's determination of a "reasonable time" should be informed by an examination of the procedures necessary for payment (such as the need to pass legislation), evidence that the judgment debtor is actively taking steps to pay the judgment, and evidence that the judgment debtor is attempting to evade payment. Ned Chartering Trading, Inc. v. Pakistan, 130 F. Supp.2d 64, 67 (D.D.C. 2001); Ferrostaal Metals Corp. v. S.S. Lash Pacifico, 652 F. Supp. 420, 423 (S.D.N.Y. 1987) (citing legislative history of § 1610(c)). What constitutes a "reasonable time" will vary according to the nuances of each case. Ned Chartering Trading, Inc., 130 F. Supp.2d at 67.
Pertamina argues that the sheer magnitude of the judgment — approximately $270 million — justifies extending the prohibition on execution beyond the six weeks proposed by KBC. Pertamina contends that it does not have money budgeted to pay the judgment, nor can it modify its budget at this time. According to Ainun Na'Im, Corporate Senior Vice President, Chief Financial Officer, and Director of Corporate Finance for Pertamina, modifying Pertamina's budget, paying the judgment out of Pertamina reserves, or borrowing money to pay the judgment, would require approval of a Government Supervisory Board, composed of the Minister in the field of Mining, Minister of Finance, and the Chairman of the National Development Planning Council. Declaration of Ainun Na'Im ("Ainun Declaration"), Exhibit A to Pertamina's Opposition, ¶¶ 2-8. If the Government Supervisory Board cannot reach a decision, the issue must be submitted to the President of the Republic of Indonesia. Id., ¶ 3. In order to illustrate the magnitude of the judgment relative to indonesian economy, Pertamina notes that the judgment represents 75% of a pending $360 million loan to Indonesia from the International Monetary Fund.
The evidence indicates that no legislation is necessary before Pertamina can pay the judgment. All that is needed is sufficient time for the Government Supervisory Board and, if necessary, the President, to consider the matter. It is not unreasonable to expect Pertamina to have presented the question to the Board within a few days after entry of the judgment. See Ned Chartering and Trading, Inc., 130 F. Supp.2d at 67 (six weeks is a sufficient amount of time for most governments to pass the minor legislation necessary to appropriate funds, and to organize and transfer the appropriate assets). Pertamina has known the extent of its potential liability for over a year, since December 18, 2000, when the Arbitral Tribunal issued its final award. Yet, there is no evidence that Pertamina made arrangements even to attempt to satisfy the judgment in the event it became necessary to do so. Further, Pertamina has offered no assurances that it intends promptly to take all the necessary steps outlined in the Ainun Declaration either to pay the entire judgment, to negotiate installment payments, or to make other interim arrangements. Nor has Pertamina suggested an alternative time frame for execution that it would consider reasonable under the FSIA.
There is no evidence that Pertamina actively is attempting to evade payment in this case. However, this factor is not dispositive of the reasonable time inquiry.
The Court is unwilling to extend the FSIA-imposed stay on execution of the judgment longer than the approximate 50 days that have passed since judgment was issued. The procedure for obtaining a stay of execution of a judgment pending appeal is by posting a supersedeas bond. FED. R. Civ. P. 62(d). Pertamina seeks a de facto stay of execution pending appeal by arguing that a reasonable period of time has not passed. However, the evidence presented by Pertamina suggests that there is little likelihood that Pertamina will pay the judgment within a reasonable period of time. The difficulties Pertamina faces in voluntarily paying the judgment underscore the necessity of allowing KBC to proceed to take other steps to satisfy the judgment. See, e.g., Ainun Declaration, ¶ 10 (Pertamina is being reorganized). Under the circumstances presented, the Court finds that a reasonable period of time following entry of judgment in this case has elapsed to allow KBC's commencement of the steps required for execution on the judgment under § 1610(c) of the FSIA. It is therefore
ORDERED that KBC's "Motion for Declaration of `Reasonable Period of Time'" is GRANTED. It is further
ORDERED that, as of this date, a reasonable time has passed to satisfy the requirements of § 1610(c) of the Foreign Sovereign Immunities Act of 1976, and KBC may commence execution of the judgment based on the Memorandum Order issued on November 30, 2001, and entered on December 4, 2001. It is further
ORDERED that KBC may not attach property of Pertamina until a court specifically orders attachment of the property at issue.