The court relied on the enabling legislation of the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (establishing the ICSID), which provides that "the pecuniary obligations" of an ICSID arbitral award "shall be enforced and shall be given the same full faith and credit as if the award were a final judgment of a court of general jurisdiction of one of the several States" (22 U.S.C. § 1650a).

The statute further provides that the Federal Arbitration Act (FAA) (9 U.S.C. §§ 1-16; 9 U.S.C. §§ 201-208; 9 U.S.C. §§ 301-307) "shall not apply to enforcement of awards rendered pursuant to the [ICSID] convention."

The Full Faith and Credit Act provides that "judicial proceedings of any court of any [ ] State ... shall have the same full faith and credit in every court within the United States ... as they have by law or usage in the courts of such State ... from which they are taken" (28 U.S.C. § 1738). Under section 1738, a court must be satisfied that the state court proceeding satisfied due process requirements.

In Keeton v. Hustler Magazine, Inc., 815 F.2d 857 (2d Cir. 1987), however, the Second Circuit held that Article 54 of the New York's Civil Practice Law and Rules (CPLR) sets forth the procedures for registering an out-of-state court judgment in New York by simply registering the sister-state judgment as New York judgment, without any judicial review of the underlying proceeding.

In Siag v. Arab Republic of Egypt, No. M-82 (PKC), , at *2 n.1 (June 19, 2009) , the US District Court for the Southern District of New York followed Keeton and entered a money judgment in the amount of an ICSID award, adopting the procedure set out in Article 54 of the CPLR (see Legal Update, Enforcement of ICSID award in the US).

A day after ICSID issued a $1.6 billion award against the Bolivian Republic of Venezuela (see Mobil Corporation, Venezuela Holdings, B.V., Mobil Cerro Negro Holding, Ltd., Mobil Venezolana de Petróleos Holdings, Inc., Mobil Cerro Negro, Ltd., and Mobil Venezolana de Petróleos, Inc. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/27), Mobil brought an ex parte petition to enter the award as a federal court judgment. The court’s miscellaneous part (Part One) granted that petition, and entered a final money judgment .

Venezuela moved to vacate the Part One judgment, urging the court not to follow Siag. Venezuela argued that the applicable procedural law was the Full Faith and Credit Act.

Venezuela also argued the Foreign Sovereign Immunities Act (FSIA), enacted in 1976, supervenes the 1966 ICSID enabling statute, so as to impose requirements on proceedings to seeking recognition of ICSID awards. Accordingly, Venezuela argued:

The court rejected Venezuela's arguments. Citing Keeton and Siag, the district court concluded that an ICSID award creditor has the option of seeking recognition ex parte pursuant to CPLR Article 54 or filing a plenary action. Like the creditor in Siag, here the creditor proceeded on an ex parte basis to enter the award as a federal judgment. In denying the motion to vacate the ex parte judgment, the court concluded that, using the same procedure as if a New York state court had been asked to enforce a sister state court judgment was appropriate.

The court noted that:

The court also noted that the ICSID treaty history supported the automatic enforcement procedure employed here. The history reflects that the delegates who drafted the ICSID treaty originally planned to use the New York Convention’s recognition and enforcement provisions. A number of delegates, however, urged that the ICSID Convention be a self-contained regime, with no judicial review. A compromise resulted: contracting states were required, without exception, to give recognition to arbitral awards, but they were obliged to enforce only the pecuniary obligations of awards, not other aspects such as specific performance.

Finally, the district court held that enforcement of the judgment should be stayed pending resolution of Venezuela's application to ICSID for revision of the award to reduce the sum awarded on account of sums awarded under an international commercial arbitration award Mobil Cerro Negro received against the Venezuelan state oil company. In reaching that conclusion, the court noted that the parties were "litigating the precise amount that will be offset on the ground that Mobil has already received a separate award against the national oil company of Venezuela."

The ICSID enabling statute is silent as to the process by which the award is converted into an enforceable US federal court judgment. The court looked to state law to fill the statutory gap. This approach, if adopted by the appellate courts, will lead to a lack of uniformity by federal courts in applying a federal statute as the law varies quite significantly among the states. Unless the Second Circuit reverses this decision, attorneys for ICSID award creditors should consider entering the award in the Southern District of New York and following the expedited procedure approved by this decision.

On July 11, 2017, the Second Circuit Court of Appeals reversed the judgment, holding the FSIA that governed these proceedings and therefore the procedural requirements set forth in the FSIA's comprehensive scheme must be satisfied before a federal court may enter judgment against a foreign sovereign.