## Facts

- Thai-Lao Lignite (Thailand) Co., Ltd. and Hongsa Lignite (Lao PDR) Co., Ltd. held contractual rights to develop a lignite-based power and mining project in Laos.
- The project agreements provided for ad hoc arbitration seated in Kuala Lumpur, Malaysia under the UNCITRAL Rules.
- After Laos terminated the project agreements, the companies initiated arbitration alleging wrongful termination and breach.
- In November 2009, the tribunal issued a final award for the companies, granting roughly $56–57 million in damages.
- The companies sought recognition and enforcement in multiple jurisdictions, including the United States and England.
- In August 2011, the Southern District of New York recognized and enforced the award and entered a money judgment; the Second Circuit summarily affirmed in 2012.
- In 2012, the Malaysian Federal Court set aside the arbitral award, concluding the tribunal exceeded the scope of its authority under the arbitration agreement.
- Laos moved in the Southern District of New York under Federal Rule of Civil Procedure 60(b)(5) to vacate the 2011 enforcement judgment based on the Malaysian annulment.
- The companies opposed vacatur, argued the court could still enforce under the New York Convention despite annulment, requested that Laos post security, and sought enforcement of an English judgment entered on the award.

## Issues

1. Whether Rule 60(b)(5) authorizes vacatur of a federal judgment enforcing a foreign arbitral award after the award is annulled by the courts at the arbitral seat.
2. How Article V(1)(e) of the New York Convention (set-aside at the seat) interacts with Rule 60(b)(5) in post-judgment proceedings.
3. Whether comity should be extended to the Malaysian annulment or withheld due to asserted unfairness or conflict with U.S. public policy.
4. Whether the court should require Laos to post security and whether the court should enforce an English judgment based on the same annulled award.

## Decision

- The court granted Laos’s Rule 60(b)(5) motion and vacated the prior judgment recognizing and enforcing the arbitral award.
- The court gave effect to the Malaysian Federal Court’s set-aside decision and declined to continue enforcement of an award annulled in the primary jurisdiction.
- The court denied the companies’ request to require Laos to post security.
- The court declined to enforce the English judgment entered on the award.

## Legal Principles

- Rule 60(b)(5) permits relief from a final judgment when the judgment is based on an earlier judgment or predicate that has been reversed or vacated; an enforcement judgment may be treated as resting on the continued existence of the award.
- Under Article V(1)(e) of the New York Convention, a court may refuse recognition and enforcement when the award has been set aside by a competent authority at the seat; the provision is permissive, not mandatory.
- As a general rule, courts in a secondary jurisdiction should extend comity to the seat court’s annulment absent a strong showing that the foreign proceeding was fundamentally unfair or contrary to basic U.S. public policy.
- Post-judgment relief under Rule 60(b)(5) is equitable and requires weighing finality against the fairness of continuing to enforce a judgment whose predicate has been nullified in the primary jurisdiction.
- A court may decline to order security or enforce a foreign judgment when doing so would effectively reimpose liability on an annulled award in tension with comity-based treatment of the seat court’s ruling.

## Conclusion

The court vacated its earlier enforcement judgment because the arbitral award had been annulled by the courts at the seat, and it treated Rule 60(b)(5) as an appropriate mechanism to unwind enforcement in light of Article V(1)(e) and comity; it also refused to require security and declined to enforce an English judgment premised on the annulled award.


Thai-Lao Lignite (Thailand) Co. v. Gov’t of the Lao People’s Democratic Republic, 997 F. Supp. 2d 214 (S.D.N.Y. 2014)