Frank A. Lauletta, Business Lawyer, New Jersey/Pennsylvania

About

Frank Lauletta is an experienced corporate attorney who has many years of “hands on” experience in private and public companies. His practice focuses heavily on representing and counseling a broad array of companies in corporate transactions such as venture capital, corporate finance, and mergers and acquisitions. Frank also has extensive experience representing companies and shareholders in connection with drafting and negotiating shareholders agreements and buy-sell agreements and also frequently represents clients involved in partnership disputes and shareholder oppression actions. with his broad legal experience, executive-level background, and extensive relationships in the legal, venture capital, and high technology communities, Frank is uniquely suited to serve as outside general counsel to clients. Working closely with executive management teams, Frank currently serves in this capacity to a number of software and other technology-based companies throughout the United States.


Frank is frequently relied upon to help develop sales, licensing and royalty-based models for companies in the software, cloud, energy, medical and other intellectual property and technology-based industries.  Frank also assists companies in developing their form sales, licensing, terms of use, distribution, employment and other agreements.  Since 1997, Frank has negotiated and closed hundreds of software licensing, distribution, technology, joint venture, construction and other complex agreements with dozens of Fortune 500 and international companies with annual transaction values ranging from hundreds of thousands to multiple millions of dollars. 


Frank advises clients regarding data security measures and responding to security breaches involving sensitive personal information and protected health information under current data security laws that continue to evolve at a fast pace throughout the world.  He also works with clients to assess and implement appropriate data security safeguards and, if a data breach occurs, help his clients to ensure compliance and minimize exposure.


References


Bio on law firm website: http://lauletta.com/our-lawyers/frank-a-lauletta/

LinkedIn Profile: https://www.linkedin.com/in/frank-lauletta-9143a82/

Law Directory: http://www.legaldirectories.com/Lauletta-Frank-A-III-245514-Atty.aspx

Attorney Profile: https://solomonlawguild.com/frank-a-lauletta

Frank A. Lauletta, attorney with the Law Firm of Lauletta Birnbaum (Pennsylvania/New Jersey).

Frank A. Lauletta, attorney with the Law Firm of Lauletta Birnbaum (Pennsylvania/New Jersey).

Prickett Nursery (Frank Lauletta, Attorney for the buyer), website of Max Spann Auctioneers

Winning Bid for 56-Acre Prickett Nursery, Mantua Township NJ

Prickett's Nursery was a Sewell, NJ institution for over 125 years.

Vert Properties, Inc. won the bid for Prickett Nursery and Garden Center in Mantua, New Jersey. The company was represented in this transaction by Frank A. Lauletta of the law firm Lauletta Birnbaum. The 56-acre property has been owned and operated as a nursery by the Prickett Family since 1876. Prickett Nursery’s roots are traced to two Irish immigrant brothers Joseph and John McCleary, who built a house on the Mantua Boulevard property, and launched a business. 


Conveniently located just a mile from Route 55, the property has road frontage on Mantua Boulevard, E. Sussex Avenue, and Woodbury/Glassboro Road. Seven homes also sit on the large plot of land.


Prickett's Nursery was a Sewell, NJ institution for over 125 years, but it closed when the prior owner Edward Smith Prickett died in December 2015 at age 80. He had sworn to work at the nursery until the day he died, and he nearly accomplished his goal.


Vert Properties, headquartered just down the street at 591 Mantua Boulevard, does not have current plans to develop the property. The nursery will simply add to Vert’s growing portfolio of properties, which spans from Southern New Jersey to Center City, Philadelphia.


Frank Lauletta of Lauletta Birnbaum, LLC, the attorney representing Vert Properties, stated that “Vert decided to purchase the parcel because not only is it a beautiful, park-like property in and of itself, it’s also situated adjacent to the 110-acre Tall Pines State Preserve and just one mile down the street from the new Jean and Ric Edelman Fossil Park at Rowan University that is currently being developed,” said Lauletta. “In a developed town like Mantua,” he continued, “it isn’t often that a large parcel of mostly undeveloped land like the Prickett Nursery becomes available.”


About Vert Properties:


Vert Properties, Inc. is a privately-held real estate leasing, development, and management firm headquartered in Sewell, New Jersey.


Vert’s business is focused in the Philadelphia and Southern New Jersey markets. In Philadelphia, their focus is residential properties and apartments in highly desirable neighborhoods like Center City, the Art Museum, and Northern Liberties.  In New Jersey, Vert Properties takes a broader approach by developing and managing office, retail, and warehouse properties in addition to traditional residential properties. 


About Lauletta Birnbaum:


Lauletta Birnbaum provides a range of corporate, transactional, intellectual property, and litigation services to companies throughout the country in various industries from real estate acquisitions and sales, development and leasing to software, data, and other high-tech industries. Designed to maximize flexibility and value in this challenging business climate, the firm offers real-world business strategy and legal expertise, often serving as outside general counsel to its clients. To learn more, visit lauletta.com. 


Bio of attorney Frank Lauletta on law firm website: http://lauletta.com/our-lawyers/frank-a-lauletta/

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More information on this property purchase is available at the link below FIND OUT MORE.

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Frank A. Lauletta recently commented on the potential opportunities for real estate investors

Frank A. Lauletta comments on real estate tax opportunities

The Tax Cut & Jobs Act provides changes and incentives that could create opportunities in New Jersey

The Tax Cuts and Jobs Act of 2017 was enacted on December 22, 2017. Explains attorney Frank Lauletta: “The Tax Cut and Jobs Act provides changes and incentives that could create opportunities for New Jersey real estate investors.  For instance, the Act imposes a $10,000 cap on the itemized deduction of state and local income and property taxes, in many cases making home ownership more expensive than renting. This could result in greater rental demand especially in states such as New Jersey where property taxes are so high. This would obviously be a benefit for apartment investors.” 


Mr. Lauletta then focuses on the tax breaks that are afforded to investors under the Act. The Act included Internal Revenue Code §1400Z, which provides tax incentives for investments in qualified Opportunity Zones through investment vehicles called Qualified Opportunity Funds. These funds are designed to encourage investments into low-income communities, which are designated by the state as Qualified Opportunity Zones. 


Within each state the number of Qualified Opportunity Zones may equal up to 25 percent of the number of low-income communities within that state. However, if there are less than 100 low income communities, than a total of 25 tracts may be designated as Qualified Opportunity Zones. Up to five percent of the tracts designated in a State may be non-low-income communities if the tract is both contiguous with the low-income community and the median family income of the tract does not exceed 125 percent of the median family income of the low-income community. In New Jersey, there are 169 opportunity zones, which in southern New Jersey include Camden, Deptford, Woodbury, Lindenwold, Pine Hill, Carneys Point, Egg Harbor City, Glassboro, Salem, Vineland, Egg Harbor Township, Bridgeton, Millville, Pleasantville, Atlantic City, Somers Point, Lower Township and Wildwood. [FN1]


If an investor realizes a gain from a sale or exchange of a capital asset from an unrelated party, the investor may defer realization and taxation if, within 180 days from the date of such sale or exchange, the investor reinvests the gain amount with a cash investment into a Qualified Opportunity Fund. A Qualified Opportunity Fund is an investment vehicle that must hold at least 90 percent of its assets in designated Qualified Opportunity Zone properties. Opportunity zone property means property which is an opportunity zone stock, an opportunity zone partnership interest, or an opportunity zone business property. A qualified opportunity zone business property means tangible property used in a trade or business if (i) such property is acquired after December 31, 2017, (ii) the fund substantially improves [FN2] the property, and (iii) substantially all of the use of the property is in a Qualified Opportunity Zone. 


Mr. Lauletta explains: “The tax advantages are three-fold. First, the tax that would otherwise be payable in connection with the sale of the prior capital asset is deferred until either the opportunity investment is sold or exchanged or December 31, 2026, whichever date comes first. As part of the deferral, the basis assigned to the replacement Qualified Opportunity Zone property of course starts at $0, however, the second advantage allows this basis to increase based upon the duration of the investment in the Qualified Opportunity Fund. If the investment is held for at least 5 years, the basis will increase by 10 percent of the amount of gain deferred. If the investment is held for at least 7 years, the basis will increase an additional 5 percent or 15 percent of the deferred amount in total. The third tax advantage is realized if the taxpayer holds Opportunity Zone Property in the Opportunity Fund for at least 10 years. If this is the case, then the basis of the Opportunity Zone Property will be the fair market value on the date it is sold. This means that no additional capital gains tax, beyond what is due on December 31, 2026, will be due when the taxpayer sells the Opportunity Zone Property.”


Mr. Lauletta concluded that “although I doubt that this Act will in and of itself cause many real estate investors to enter into new markets they are currently not invested in, those investors already active in these opportunity zones may be incentivized to expand their investment activity.” 


About Lauletta Birnbaum


Lauletta Birnbaum has offices in Sewell, NJ and Philadelphia, PA and provides a full spectrum of corporate, transactional, and litigation services to businesses and individuals throughout the country in various industries such as real estate, construction, insurance and banking, intellectual property, software and licensing, data, and media. Designed to maximize flexibility and value, the firm offers real-world business strategy and legal expertise, often serving as outside general counsel to its clients. To learn more, visit lauletta.com. 


[FN1] The following link contains a map of the New Jersey Designated Opportunity Zones:

https://www.state.nj.us/dca/divisions/lps/pdf/Statewide_Designated_Opportunity_Zones_Map.pdf 

[FN2] “Substantially improves” means that the investor must invest an amount equal to or greater than the cost to initially acquire the property. In other words, at least 50% of the total investment amount must be used toward improving the property.


Frank Lauletta was selected as a finalist for “Attorney of the Year” by SmartCEO‘s Power Players Awards (2014), http://smartceo.com/2014-philadelphia-power-playersfrank-

lauletta/ and selected as a “Best Attorney in Business” by South Jersey Biz magazine (2014,

2015), http://www.southjerseybiz.net/articles/?articleid=879,

http://southjerseybiz.net/articles/?articleid=1061

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See the Wikipedia article on the Tax Cuts and Jobs Act 2017: "The Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,[2] Pub.L. 115–97, is a congressional revenue act originally introduced in Congress as the Tax Cuts and Jobs Act (TCJA),[3][4] that amended the Internal Revenue Code of 1986."

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Lauletta Birnbaum to Expand Incutate Co-Working Facility that enables Start-Up and Small Businesses

Incutate, LLC, is expanding in Southern New Jersey

Serves the needs of start-up and emerging growth companies with incubator-type work environment

Lauletta Birnbaum, LLC (Sewell, NJ) formed Incutate, LLC in 2011 as a consulting firm to serve the needs of start-up and emerging growth companies in Southern New Jersey. A few years later, the concept evolved into a fully equipped 10,000 square foot co-working facility adjacent to the law firm’s headquarters located at 591 Mantua Boulevard in Sewell, New Jersey. Since the facility is near capacity, the Firm is in the process of expanding Incutate into additional space in the building and plans to add an additional 10,000 to 15,000 square feet.


As a law firm serving the needs of many companies throughout the country in various industries and in various stages of business, Lauletta Birnbaum, LLC came to realize that entrepreneurs in the Southern New Jersey area, especially south of Camden County, are not afforded access to the same professional office resources and professional advice that is more readily available to companies in nearby regions such as Philadelphia, New York and Northern New Jersey markets. 


Frank Lauletta, a founding member of the Firm, stated that “being based in Gloucester County, New Jersey, we felt it was important to form Incutate to help advance our region’s growth and to increase its drive for entrepreneurship and innovation. The name was derived from the words ‘incubate’ and ‘technology,’ and the goal is to provide a collaborative environment.”


Incutate member companies benefit not only from having access to professionals that visit the facility, but also by interacting and communicating with other Incutate member companies. Companies in co-working facilities such as Incutate have the opportunity to share knowledge, recognize important issues, and quickly address and solve problems as they pass through various stages of growth. Many of the issues growing companies face are the same or similar to those experienced by their peers.


“Many startup companies cannot afford the basic organizational structure, such as a properly equipped office, protection of any intellectual property, legal advice, and financial and accounting advice,” explains Frank Lauletta. “The incubator-type approach we have developed keeps start-up costs low, while providing a broad range of necessary infrastructure. The model also works for established companies looking to expand into a new area. For instance, Molix, a well know sport fishing tackle manufacture based in Italy, started its U.S. operations in our facility.”

The Incutate co-working facility is managed by Vert Properties, Inc., which also maintains its corporate headquarters in the Incutate facility. 


For more information about Lauletta Birnbaum visit www.lauletta.com. For more information about Vert Properties, Inc. visit www.vertproperties.com.  

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For more information about Incutate visit www.incutate.com or call (856) 347-8125 to schedule a tour. 

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Website of the law firm of Lauletta Birnbaum, Frank Lauletta, one of the founding partners.

Commercial Apprenticeship Program of Lauletta Birnbaum

Philadelphia Area Law Firm reflects upon the success of its eight-year-old Commercial Law Program

Frank Lauletta is an experienced corporate attorney providing legal services for private and public companies. His practice focuses heavily on representing and counseling a broad array of companies in corporate transactions such as venture capital, corporate finance, and mergers and acquisitions. Frank also has extensive experience representing companies and shareholders in connection with drafting and negotiating shareholders agreements and buy-sell agreements and also frequently represents clients involved in partnership disputes and shareholder oppression actions. with his broad legal experience, executive-level background, and extensive relationships in the legal, venture capital, and high technology communities, Frank is uniquely suited to serve as outside general counsel to clients. 

Working closely with executive management teams, Frank currently serves in this capacity to a number of software and other technology-based companies throughout the United States.

Frank is frequently relied upon to help develop sales, licensing and royalty-based models for companies in the software, cloud, energy, medical and other intellectual property and technology-based industries. Frank also assists companies in developing their form sales, licensing, terms of use, distribution, employment and other agreements. Since 1997, Frank has negotiated and closed hundreds of software licensing, distribution, technology, joint venture, construction and other complex agreements with dozens of Fortune 500 and international companies with annual transaction values ranging from hundreds of thousands to multiple millions of dollars. 

Frank also advises clients regarding data security measures and responding to security breaches involving sensitive personal information and protected health information under current data security laws that continue to evolve at a fast pace throughout the world. He also works with clients to assess and implement appropriate data security safeguards and, if a data breach occurs, help his clients to ensure compliance and minimize exposure.

Contact

Sewell (Headquarters)

591 Mantua Boulevard, Suite 200

Sewell, NJ 08080

Phone: 856.232.1600

Fax: 856.232.1601

Philadelphia

Land Title Building

100 S. Broad Street, Suite 905

Philadelphia, PA 19110

Phone: 215.599.7229

Fax: 856.232.1601

Cherry Hill

532 Route 70 West

Cherry Hill, NJ 08002

Phone: 856.232.1600

Fax: 856.232.1601

News

“Vert Properties Wins Bid to Buy 56-Acre Prickett Nursery in Mantua Township, New Jersey,” https://www.einpresswire.com/shareable-preview/C4M_QBqRjIXnqhU0RYPTig

“New Jersey/Philadelphia Law Firm Lauletta Birnbaum Helps Raise $10,000 for Local Charities,” https://www.einpresswire.com/shareable-preview/U_U2FuIBOwNvbZq_8bRRyg

“To expand Opportunities for Start-Up and Small Businesses, Lauletta Birnbaum enlarges New Jersey Co-Working Facility,” https://www.einpresswire.com/shareable-preview/srB27mF9XS1PGOw7b0gC-w

“New Jersey lawyer Frank Lauletta explains opportunities for investors in New Jersey based the Tax Cuts & Jobs Act,” https://www.einpresswire.com/shareable-preview/45T6KUIr8BejAWEB4dYVWQ 

“Lauletta Birnbaum to Expand Incutate Co-Working Facility that enables Start-Up and Small Businesses,” https://www.einpresswire.com/article/454957040/lauletta-birnbaum-to-expand-incutate-co-working-facility-that-enables-start-ups-and-small-businesses and https://www.prlog.org/12718076-incutate-is-expanding-in-southern-new-jersey-to-serve-start-up-and-emerging-growth-businesses.html

"Philadelphia Law Firm reflects upon success of its Apprenticeship Program to introduce young lawyers to the profession," https://www.einpresswire.com/shareable-preview/TKnldMYnEZpnCMIOuV0eCg

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Frank Lauletta recently commented on the success of the Commercial Law Apprenticeship Program established by the law firm Lauletta Birnbaum, LLC. See https://www.einpresswire.com/article/452286810/philadelphia-law-firm-reflects-upon-success-of-its-apprenticeship-program-to-introduce-young-lawyers-to-the-profession?r=paIl8jUeAYhAnUGoTg 

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Lauletta Birnbaun Law Firm Raises $10,000 for a non-profit

Lauletta Birnbaun Law Firm Helps Raise $10,000 for Charities

The Law Firm's ping pong tournament this year was the most successful so far - with 200 people in attendance, it raised $10,000 for two charities.


Sewell, NJ 2018 – Earlier this year, the law firm Lauletta Birnbaum held their 4th Annual Ping Pong Tournament at their Sewell, New Jersey offices. This year’s tournament was their most successful yet: nearly 200 people attended, and with the help of sponsors around the community, the firm raised $10,000 for two local 501(c)(3) charitable organizations.


The main benefactor was An Opportunity’s Knockin’ or simply “A O.K.” (www.anoppknock.org). A O.K. is an organization that strives to equip children and young adults with the tools needed to make a positive impact on their attitude, future decisions, and their overall perception of life. A O.K. helps kids understand that it’s not what you become in life, but who you become that matters.


Frank Lauletta, an attorney who helps organize the event, said: “The Ping Pong Tournament is a great way to both bring people together for networking and help this incredible organization. There are many young adults in our community who have the drive and desire to succeed, but may lack the resources at home to guide them in the best direction to achieve their goals. A O.K. strives to help these young adults not only achieve their goals, but more importantly, set appropriate goals and decide what is truly important to find happiness. I am proud to be associated with this organization and help fund its efforts through events such as our Ping Pong Tournament.”


Tournament proceeds also went to The Toni Donato-Bolis & Baby RJ Foundation (www.toniandrjfoundation.org) whose mission is to educate individuals on the dangers of distracted driving. Fundraising efforts allow the Toni & RJ Foundation to award scholarships to high school students. Scholarships are granted to graduating seniors with plans of continuing their studies at an accredited college, university or institute of higher learning. The Foundation rewards students for their eagerness to support the cause and the willingness to get involved in spreading awareness of distracted driving.


Remember it is never too early to start practicing for next year. We hope to see everyone at the 5th Annual Ping Pong Tournament in January.


About the Law Firm Lauletta Birnbaum:


Lauletta Birnbaum provides a range of corporate, transactional, intellectual property, and litigation services to private and public companies throughout the country in various industries such as software, high technology, energy, media, banking and real estate development and leasing. Designed to maximize flexibility and value in this challenging business climate, the firm offers realworld business strategy and legal expertise, often serving as outside general counsel to its clients. To learn more, visit lauletta.com.


Frank Lauletta was selected as a “Best Attorney in Business” by South Jersey Biz magazine (2014, 2015), http://www.southjerseybiz.net/articles/?articleid=879,

http://southjerseybiz.net/articles/?articleid=1061

Ping Pong Tournament of the Law Firm Lauletta Birnbaum to raise funds for Charities.

Ping Pong Tournament of the Law Firm Lauletta Birnbaum to raise funds for Charities.

Award enforcement against Belize, Circuit rejects immunity

Transactions at issue were essentially the sale of real estate and thus commercial in nature

In action to enforce arbitral award against Belize, District of Columbia Circuit rejects Belize’s claims of immunity because transactions at issue were essentially the sale of real estate and thus commercial in nature; New York Convention’s definition of “commercial” is not the same as the FSIA’s definition


In 2005, Belize Telemedia Limited (“Telemedia”), Belize’s largest private telecommunications company, and the Government of Belize (“Belize”), acting under the direction of then-Prime Minister Said Musa, entered into an agreement styled “The Accommodation Agreement” to purchase properties from Belize which the country desired to sell in order to better accommodate the Government’s communication needs. According to this agreement, Telemedia was to obtain relief from tax and regulatory burdens otherwise applicable to the company, and receive other significant benefits. The parties also agreed on the following arbitration clause:

Any dispute arising out of or in connection with this Agreement including any question regarding its existence, validity or termination, which cannot be resolved amicably between the parties shall be referred to and finally resolved by arbitration under the London Court of International Arbitration (LCIA) Rules which Rules are deemed to be incorporated by reference under this Section.

In 2008, the Prime Minister Dean Barrow took office. The Prime Minister Barrow renounced the Accommodation Agreement, asserting that it was repugnant to the laws of Belize and therefore invalid. When Belize ceased to honor its contractual obligations, Telemedia submitted the dispute to arbitration before the LCIA in London. Belize refused to participate in the arbitration proceedings, contending that the arbitration clause was invalid and that the arbitrators lacked jurisdiction. On March 18, 2009, the arbitral tribunal ruled that the Accommodation Agreement was valid and binding on Belize; that the tribunal had jurisdiction over Telemedia’s claims; and that Belize had breached the Accommodation Agreement. The tribunal granted Telemedia declaratory relief, and awarded over 38 million Belize dollars in damages. Telemedia assigned the monetary portion of this award to Belize Social Development Limited (“BSDL”).

In November 2009, pursuant to section 207 of the Federal Arbitration Act (“FAA”), BSDL brought suit in the District Court for the District of Columbia to confirm the arbitral award. Belize moved to stay confirmation of the award pending resolution of related litigation in Belize, which the district court granted. BSDL then appealed. 

The United States Court of Appeals for the District of Columbia Circuit reversed, noting that under the FAA, the stay order was not in conformity with federal law and international commitments. The Court remanded and instructed the district court to review and grant BSDL’s petition to confirm the Final Award absent a finding that an enumerated exception to enforcement applied. On remand, Belize argued that the Prime Minister at the time of the entry of the agreement lacked authority to enter either the contract or the arbitration agreement, and that the district court lacked subject matter jurisdiction over the dispute claiming its sovereign immunity under the Foreign Sovereign Immunities Act (“FSIA”). Because Belize had not provided support for its claim with respect to the arbitration agreement, the district court held that jurisdiction was proper under the arbitration exception to the FSIA, and granted BSDL’s petition to confirm the award. Belize appealed. 

The United States Court of Appeals for the District of Columbia Circuit affirms the judgment of the District Court. The key issue here is whether and under what circumstances the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. § 1605(a)(6), arbitration exception applies to a case in which the action was brought to confirm an award made pursuant to an agreement to arbitrate. 

“The Foreign Sovereign Immunities Act is ‘the sole basis for obtaining jurisdiction over a foreign state in the courts of [the United States].’ Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 443 (1989). Its terms are absolute: Unless an enumerated exception applies, courts of this country lack jurisdiction over claims against a foreign nation. Saudi Arabia v. Nelson, 507 US. 349, 355 (1993). BSDL claims the arbitration exception applies to this case.” [Slip op. 3]

“The arbitration exception provides: ‘A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case . . . in which the action is brought, either to enforce an agreement made by the foreign state with or for the benefit of a private party to submit to arbitration all or any differences which have arisen or which may arise between the parties with respect to a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration under the laws of the United States, or to confirm an award made pursuant to such an agreement to arbitrate, if . . . the agreement or award is or may be governed by a treaty or other international agreement in force for the United States calling for the recognition and enforcement of arbitral awards.’ 28 U.S.C. § 1605(a)(6).”

“Where a plaintiff has asserted jurisdiction under the FSIA and the defendant foreign state has asserted ‘the jurisdictional defense of immunity,’ the defendant state ‘bears the burden of proving that the plaintiff’s allegations do not bring its case within a statutory exception to immunity.’ Phoenix Consulting Inc. v. Republic of Angola, 216 F.3d 36, 40 (D.C. Cir. 2000). […]” [Slip op. 3-4]

Belize argued that the arbitration exception does not apply. First, it argued that the arbitration exception to sovereign immunity does not apply because there was no “agreement made by the foreign state.” 28 U.S.C. § 1605(a)(6). Belize deducted that the Prime Minister lacked authority to bind the sovereign in an unconstitutional agreement; and that the Accommodation Agreement violated the Constitution and laws of Belize. Therefore, the Prime Minister lacked authority to bind Belize in the Accommodation Agreement and execute it on behalf of Belize. Belize concluded that the agreement was void ab initio, and that every provision in the agreement, including the arbitration provision, was void. 

The Court does not agree with this argument. 

“The language of the FSIA arbitration exception makes clear that the agreement to arbitrate is severable from the underlying contract. The exception only requires a valid ‘agreement . . . to submit to arbitration,’ 28 U.S.C. § 1605(a)(6). It also distinguishes between the underlying ‘legal relationship’ and the agreement to arbitrate disputes arising from that relationship. Id. As we have previously noted, the agreement to arbitrate is ‘separate from the obligations the parties owe to each other under the remainder of the contract.’ Marra v. Papandreou, 216 F.3d 1119, 1123, 1125 (D.C. Cir. 2000). It is, for all intents and purposes, ‘a distinct contract in and of itself.’ Id.; see Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 40304 (1967) (distinguishing between the agreement to arbitrate and the underlying contract). In order to succeed in its claim that there was no ‘agreement made by the foreign state . . . to submit to arbitration,’ 28 U.S.C. § 1605(a)(6), Belize must show that the Prime Minister lacked authority to enter into the arbitration agreement. This Belize has failed to do.” [Slip op. 4]

“More briefly put, this case turns on the proposition that Belize entered two agreements: the Accommodation Agreement and the Agreement to Submit to Arbitration, albeit the two were entered simultaneously. The argument of Belize that the Accommodation Agreement was beyond the authority of the Prime Minister might provide a defense if we were considering this controversy de novo on its merits. However, in order to bring that argument before us, Belize must first establish that the arbitration provision of the contract is void, so that we would not be bound to honor the arbitral tribunal’s determinations. We cannot determine the merits of the defense if the arbitration clause applies. Since Belize has not negated the clause, we do not reach the merits defense.” [Slip op. 5]

Second, Belize argued that the arbitration exception does not apply because the award is not “governed by a treaty or other international agreement . . . calling for the recognition and enforcement of arbitral awards.” 28 U.S.C. § 1605(a)(6). Belize contended that the New York Convention does not govern the award because the treaty requests that the award arise from a commercial transaction while this award arose from a governmental transaction. 

“The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the New York Convention) is a multilateral treaty providing for ‘the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought.’ Convention on the Recognition and Enforcement of Foreign Arbitral Awards (‘New York Convention’), art. I(1), 21 U.S.T. 2517 (1970). For most signatories, the New York Convention applies to all private arbitral agreements, regardless of the subject matter. Restatement (Third) of Foreign Relations Law § 487 cmt. f (1987). The United States, however, made a declaration, authorized by Article I(3) of the Convention, that the Convention would be applicable ‘only to differences arising out of legal relationships whether contractual or not, which are considered commercial under the national law of the State making such declaration.’ New York Convention, 21 U.S.T. 2517. The United States implemented the Convention in the Federal Arbitration Act, 9 U.S.C. § 201 et seq. See id. at § 202 (applying the Convention to an award that arises ‘out of a legal relationship, whether contractual or not, which is considered as commercial’).”

“The New York Convention, as codified in the FAA, does not define the term ‘commercial.’ ‘When a statute uses [a term of art], Congress intended it to have its established meaning.’ McDermott Int’l, Inc. v. Wilander, 498 U.S. 337, 342 (1991). In the context of international arbitration, ‘commercial’ refers to ‘matters or relationships, whether contractual or not, that arise out of or in connection with commerce.’ Restatement (Third) of U.S. Law of Int’l Comm. Arbitration § 11 (2012); see Restatement (Third) of Foreign Relations Law § 487 cmt. f (1987) (‘That a government is a party to a transaction does not destroy its commercial character; indeed, the fact that an agreement to arbitrate is in the contract between a government and a private person may confirm its commercial character. . . .’). As the Comment to the Restatement on International Commercial Arbitration explains, ‘A matter or relationship may be commercial even though it does not arise out of or relate to a contract, so long as it has a connection with commerce, whether or not that commerce has a nexus with the United States.’ Restatement (Third) of U.S. Law of Int’l Comm. Arbitration § 11 cmt. e; see Island Territory of Curacao v. Solitron Devices, Inc., 356 F. Supp. 1, 13 (S.D.N.Y. 1973) (‘[I]t seems clear that the full scope of ‘commerce’ and ‘foreign commerce,’ as those terms have been broadly interpreted, is available for arbitral agreements and awards.’ (quoting Leonard V. Quigley, Convention on Foreign Arbitral Awards, 58 A.B.A. J. 821, 823 (1972))). Using the Restatement’s definition of ‘commercial,’ the New York Convention applies to the Accommodation Agreement.”

“The text of the FAA’s codification of the New York Convention is consistent with this conclusion. While the New York Convention, as codified in the FAA, does not expressly define ‘commercial,’ it does expressly encompass any ‘transaction, contract, or agreement described in’ 9 U.S.C. § 2. 9 U.S.C. § 202. Section 2 in turn includes contracts ‘evidencing a transaction involving commerce,’ 9 U.S.C. § 2 — a term the Supreme Court has interpreted ‘as the functional equivalent of the more familiar term `affecting commerce’ — words of art that ordinarily signal the broadest permissible exercise of Congress’ Commerce Clause power,’ Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56 (2003). The Accommodation Agreement falls within that term’s broad compass.”

“The Agreement involves the sale of real property in exchange for certain accommodations, a transaction with a connection to commerce. See Holzer v. Mondadori, No. 12 Civ. 5234, 2013 WL 1104269, at *5 (S.D.N.Y. Mar. 14, 2013) (noting that the sale of property is commercial under the New York Convention). The provision of telecommunication services has an even more obvious connection to commerce. Indeed, in today’s technological age, telecommunication services are often a ‘crucial segment of the economy.’ AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 397 (1999). The taxes Belize levies against a company also have a connection with commerce, see Commonwealth Edison Co. v. Montana, 453 U.S. 609, 61415 (1981) (noting the impact taxes have on commerce), as do the duties Belize charges (or forgoes charging). We thus conclude that the Accommodation Agreement is commercial and is governed by the New York Convention.” [Slip op. 5-7]

Furthermore, Belize argued that the court should adopt the definition of “commercial” as articulated by the Supreme Court in Republic of Argentina v. Weltover, Inc., 504 U.S. 607 (1992). In examining the scope of the FSIA’s “commercial activity” exception, 28 U.S.C. § 1605(a)(2), the Supreme Court held in this case that a foreign state engages in commercial activities when it acts in the manner of a private player within the market; and reasoned that the FSIA “largely codifies the so-called ‘restrictive’ theory of foreign sovereign immunity”; that the word “commercial” was a “term of art”; and that Congress therefore intended the word to have “the meaning generally attached to that term under the restrictive theory at the time the statute was enacted,” i.e., distinguishing between “state sovereign acts, on the one hand, and state commercial and private acts, on the other.” Weltover, 504 U.S. at 614.

“Belize’s reliance on Weltover is misplaced. Unlike with the FSIA, Congress was not codifying the restrictive theory of foreign sovereign immunity when it ratified and implemented the New York Convention. Rather, the treaty concerns international arbitration. We thus recognize that: (1) the Convention’s purpose was to ‘encourage the recognition and enforcement of commercial arbitration agreements in international contracts,’ TermoRio S.A. E.S.P. v. Electranta S.P., 487 F.3d 928, 933 (D.C. Cir. 2007); (2) the word ‘commercial’ is a ‘term of art’; and (3) in implementing the Convention, Congress intended that word to have the meaning generally attached to that term in the international commercial arbitration context. As we discussed above, ‘commercial’ in the context of international arbitration refers to matters which have a connection to commerce. Belize’s argument to the contrary will not sell.” [Slip op. 7]

The Court affirms the District Court’s decision. 

Citation: Belize Social Development Ltd. v. Government of Belize, No. 14-7002 (D.C. Cir. 2015). 

Website of the law firm of Lauletta Birnbaum, Frank Lauletta, one of the founding partners.

Website of the law firm of Lauletta Birnbaum, Frank Lauletta, one of the founding partners.