Facts

DRC Inc. brought an action in the District of Columbia to enforce an arbitration award against the Republic of Honduras that was entered in the Republic of Honduras. The original arbitration award of $51 million was entered in favor of DRC against Fondo Hondureno de Inversion Social, or FHIS, which is a sub-entity of the Republic of Honduras.

PLAINTIFF'S CONTENTIONS:
DRC alleged that it entered a construction contract with FHIS to build certain water and wastewater sub-projects in Honduras after a hurricane in 1998. DRC argued that the arbitration award could be enforced against the Republic under the "arbitration exception" to the Foreign Sovereign Immunities Act. DRC further argued that because FHIS was the agent or alter ego of the Republic, the Republic did not have sovereign immunity under the arbitration exception.

DEFENDANTS' CONTENTIONS:
The Republic argued that the court lacked jurisdiction over the action because the Republic had sovereign immunity since it was not a party to the contract containing the arbitration agreement, it did not participate in the arbitration, and the arbitration award was not made against it.

The Republic argued that FHIS was a separate juridical entity from the Republic under the seminal U.S. Supreme Court case of Bancec, and that the acts of FHIS therefore could not be imputed to the Republic.

Result

The court granted the Republic's motion to dismiss DRC's petition to confirm the arbitration award. The court held that the Republic did enjoy sovereign immunity with respect to the petition and, therefore, the court lacked jurisdiction over the matter. The court held that FHIS was established as an independent entity that was entitled to a presumption of separateness from the Republic and DRC failed to overcome that presumption.