An Arbitral Award Creditor May Be Entitled to RICO’s Treble Damages Where an Award Debtor Attempts to Evade Enforcement of an Arbitral Award
On June 22, the Supreme Court affirmed a Ninth Circuit ruling that a non-U.S. arbitral award creditor had adequately pled “domestic injury” in a civil RICO lawsuit. After an arbitral award debtor allegedly engaged in fraud, obstruction of justice and witness tampering to evade paying a judgment on the award, the creditor filed a civil RICO lawsuit against the debtor and his bank. The district court initially dismissed the lawsuit—asserting there was no “domestic injury” because the creditor lived outside the United States. The Supreme Court ruled that the creditor had adequately pled “domestic injury” because the rights to enforcement of the arbitral award had crystallized in the U.S., and the alleged racketeering activity had been largely undertaken in the U.S. This ruling raises the possibility that more arbitral award creditors may seek treble damages through RICO claims although it is unclear how often the facts necessary to give rise to a plausible civil RICO claim may coincide with non-payment of an arbitral judgment.
