09-3925-cv
Figueiredo Ferraz v. Republic of Peru
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term 2010
Heard: October 19, 2010 Decided: December 14, 2011
Last papers submitted: June 22, 2011
Docket Nos. 09-3925-cv (L), 10-1612-cv (CON)
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FIGUEIREDO FERRAZ E ENGENHARIA DE PROJETO LTDA.,
Plaintiff-Appellee,
v.
THE REPUBLIC OF PERU, MINISTERIO DE VIVIENDA,
CONSTRUCCION Y SANEAMIENTO, PROGRAMA AGUA PARA
TODOS (PAPT) (successor by integration to
Programa De Apoyo A La Reforma Del Sector
Saneamiento (PARSSA), formerly known as Proyecto
Especial Programa Nacional De Agua Potable &
Alcantarillado (PRONAP)),
Defendants-Appellants.
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Before: NEWMAN, WINTER and LYNCH, Circuit Judges.
Interlocutory appeal from the September 8, 2009, order of the
United States District Court for the Southern District of New York
(William H. Pauley III, District Judge), denying a motion to dismiss
a suit seeking confirmation of an international arbitration award.
The Appellant contends that the petition should be dismissed on
the ground of forum non conveniens in favor of an action in the courts
of Peru.
Reversed and remanded with directions to dismiss the petition.
Judge Lynch dissents with a separate opinion.
Juan C. Basombrio, New York, N.Y. (Mark S.
Sullivan, Dorsey & Whitney LLP, New
York, N.Y., on the brief), for
Defendants-Appellants.
Thomas J. Hall, New York, N.Y. (Robert E.
Grossman, Paige M. Willan, Chadbourne &
Parke LLP, New York, N.Y., on the
brief), for Appellee.
JON O. NEWMAN, Circuit Judge.
This is an interlocutory appeal from the denial of a motion to
dismiss, primarily on the ground of forum non conveniens (“FNC”), a
petition seeking confirmation of an international arbitration award.
A principal public interest factor to be weighed in assessing the FNC
claim is a Peruvian statute that limits the amount of money that an
agency of the Peruvian government may pay annually to satisfy a
judgment. The limit is three percent of the agency’s annual budget.1
The Republic of Peru (“the Republic”), the Ministry of Housing,
Construction and Sanitation (“the Ministry”), and the Programa Agua
Para Todos (“the Program”) – collectively “the Appellants” – appeal
from the September 8, 2009, order of the United States District Court
for the Southern District of New York (William H. Pauley III, District
Judge), denying their motion to dismiss an action to confirm an
arbitration award in favor of Appellee Figueiredo Ferraz Consultoria
E Engenharia de Projeto Ltda. (“Figueiredo”). See Figueiredo Ferraz
1
Throughout the litigation, the parties have referred to the three
percent provision as a “cap.” In recent correspondence to this Court,
the Plaintiff-Appellee refers to it as “a maximum that an agency is
required to set aside from its budget each year to pay awards and
judgments.” Letter from Thomas J. Hall, Esq. to Catherine O’Hagan
Wolfe, Clerk of Court (June 16, 2011) (original citation and textual
alteration omitted). We will continue to refer to the provision as a
“cap” or a “limit” without intending thereby to interpret its precise
meaning.
-2-
Consultoria E Engenharia de Projeto Ltda. v. Republic of Peru, 655 F.
Supp. 2d 361 (S.D.N.Y. 2009). The Appellants sought dismissal on
several grounds, including lack of subject matter jurisdiction, FNC,
and international comity. We conclude that the District Court erred
in declining to dismiss on the FNC ground and therefore reverse and
remand with directions to dismiss the petition.
Background
This case arises from a consulting agreement entered into by the
Appellee and the Program in 1997, pursuant to which the Appellee was
to prepare engineering studies on water and sewage services in Peru.
The agreement provides: “The parties agree to subject themselves to
the competence of the Judges and Courts of the City of Lima or the
Arbitration Proceedings, as applicable.” After a fee dispute arose,
the Appellee commenced arbitration in Peru against the Program, and in
January 2005, the arbitral tribunal rendered an award (the “Award”)
directing the Program to pay the Appellee more than $21 million, which
included approximately $5 million of principal damages plus accrued
interest and cost of living adjustments as of the time of the award.
The Ministry appealed to the Court of Appeals in Lima, challenging the
Award and seeking its nullification on the ground that, under Peruvian
law, the arbitration was an “international arbitration” involving a
non-domestic party and, thus, recovery should have been limited to the
amount of the contract. In October 2005, the Lima Court of Appeals
denied the appeal, ruling that because the Appellee had designated
itself a Peruvian domiciliary in the agreement and the arbitration,
the arbitration was a “national arbitration” involving only domestic
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parties, and thus, the Award, rendered in equity, was permissible. In
its pending amended petition2 in the Southern District of New York, the
Appellee alleges that it is a Brazilian corporation.
A Peruvian statute imposes, in some circumstances, a limit of
three percent of the budget of a governmental entity on the amount of
money the entity may pay annually to satisfy a judgment.3 See Law No.
27584, Art. 42, as amended by Law No. 27684, currently set forth in
Supreme Decree No. 013-2008-JUS, Art. 47.4
2
The Appellee has styled its amended petition to confirm and
enforce the Award as an amended “complaint.” As the District Court
correctly noted, see Figueiredo, 655 F. Supp. 2d at 378, the
Appellee’s pleading is more properly termed a “petition” or “motion.”
See D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 101, 107 (2d Cir.
2006). We will refer to the Appellee’s pleading as a “petition.”
3
Because the precise meaning of the statute is unclear and need
not be definitively explicated in this lawsuit, we will not endeavor
to state the operation of the statute with precision.
4
An English language explanation of the statute was provided by
Jorge Avendaño, a Peruvian lawyer and law professor. As explained by
Prof. Avendaño, the statute establishes the following procedure:
“(i) Requirements to pay ordered by judges shall be
attended only and exclusively by the budget
division in which the debt was generated, under the
responsibility of the head of the division.
“(ii) The General Office of Administration of the
corresponding state entity or agency must proceed
in conformity with the general mandate of the
requirement and within the framework of the annual
budget laws.
“(iii) In case the financing ordered by the General Office
of Administration is insufficient for compliance
with the sentence, the head of the division may
make budget modifications within fifteen days of
receiving the notification, which fact must be
communicated to the corresponding jurisdictional
agency.
“(iv) Should there be requirements in excess of the
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Although the Appellee has not attempted to confirm the
arbitration award in a Peruvian court or obtain and execute upon a
judgment in Peru, the Program has been making payments on the Award.
However, because of imposition of the statutory three percent cap, the
Program’s payment at the time of briefing was just over $1.4 million.
In January 2008, the Appellee filed a petition in the Southern
District to confirm the Award and obtain a judgment for $21,607,003.
The petition was brought pursuant to the Federal Arbitration Act, 9
U.S.C. § 1 et seq. (“FAA”), the Inter-American Convention on
financing possibilities expressed above, the
General Office of Administration of the
corresponding sector shall inform the judicial
authority of its commitment to attend to such
sentences in the following budgetary exercise, to
which end it is obliged to destine [sic] up to 3%
of the budgetary allotment assigned to the division
by the source of ordinary resources.
The Ministry of Economy and Finances and/or the
Office of Provisional Normalization, as the case
may be, shall calculate the 3% referred to above,
deducting the amount corresponding to the allotment
for the payment of service to the public debt, the
contingency reserve and the provisional
obligations.
“(v) When six months have lapsed since the judicial
notification without the payment having been
initiated or the obligation assumed in accordance
with some of the procedures mentioned above, the
process of execution of judicial resolutions
provided for in Articles 713 et seq. of the Civil
Procedures Code, which applies to individuals who
must pay sums of money by judicial mandate, may be
initiated. It is at this stage that the seizure of
State goods may be requested, but only of the goods
of private domain, since goods of public domain
enjoy the immunity granted by Article 73 of the
Political Constitution of Peru.
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International Commercial Arbitration (the “Panama Convention”),
enforceable pursuant to the FAA, see id. § 301, or, alternatively, the
Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (the “New York Convention”), also enforceable pursuant to the
FAA, see id. § 201. Jurisdiction was based on the FAA, 9 U.S.C.
§ 203, and the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C.
§ 1330(b). In opposing a motion by the Appellants to dismiss, the
Appellee alleged that Peru has substantial assets in New York,
resulting from the sale of bonds. The Appellants acknowledge the
existence of these funds. In September 2009, the District Court
denied the Appellants’ motion to dismiss, which had asserted various
grounds, including lack of subject matter jurisdiction under the FSIA,
FNC, and international comity. The District Court ruled, among other
things, that the Program and the Republic are not separate entities
under Peruvian Law, see Figueiredo, 655 F. Supp. 2d at 369, that Peru
is therefore subject to the Award despite not having signed the
consulting agreement, see id. at 367-71, that jurisdiction was proper
under the FSIA, see id. at 371-72, and that dismissal was not
appropriate under FNC, see id. at 374-77, the Agreement’s forum
selection clause, see id. at 377, or international comity, see id. at
377-78. The Court appears not to have explicitly considered whether
the three percent cap statute was relevant to any of the threshold
issues it decided, and had no occasion to consider what effect, if
any, that statute might have on the Appellants’ payment obligation
because the Court did “not reach the ultimate question whether the
Award should be confirmed.” Id. at 378.
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The Appellants filed an interlocutory appeal, No. 09-3925, from
the denial of their motion to dismiss, predicating appellate
jurisdiction on the collateral order doctrine, which is applicable to
an order denying a motion to dismiss that had sought FSIA immunity,
see Kensington International Ltd. v. Itoua, 505 F.3d 147, 153 (2d Cir.
2007).5 Thereafter, pursuant to 28 U.S.C. § 1292(b), the Appellants
moved for leave to appeal the Court’s determinations concerning FNC,
the forum selection clause, and comity. The Court granted the motion
and certified for interlocutory appeal those portions of its ruling
concerning these issues. This Court then granted the Appellants’
section 1292(b) petition for an interlocutory appeal,6 No. 10-478-cv,
and consolidated Nos. 09-3925-cv and 10-478-cv. See Figueiredo v.
Republic of Peru, No. 10-478 (2d Cir. Apr. 29, 2010) (order granting
interlocutory appeal). After oral argument, we invited the views of
the United States on “aspects of the appeal that might have
implications for the conduct of the foreign relations of the United
States.”7 See Letter from Catherine O’Hagan Wolfe, Clerk of Court, to
5
But cf. Van Cauwenberghe v. Biard, 486 U.S. 517, 529 (1988),
ruling that denial of a motion to dismiss on FNC grounds is not
appealable as a collateral order.
6
The order stated that the petition is granted “in the interests
of judicial economy so as to allow the panel which will consider the
merits of the FSIA appeal, Docket No. 09-3935-cv, an opportunity, if
it wants to do so, to consider the questions presented in this appeal
relating to forum.” We construe the order as authorizing this panel
to consider all of the issues certified for interlocutory appeal by
the District Court and all matters pertinent to those issues.
7
We specifically called the Government’s attention to the
competing concerns that dismissal on forum non conveniens or other
grounds might run counter to United States treaty obligations and that
the three percent cap statute might either be a public factor
warranting dismissal on the grounds of forum non conveniens or
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Neal Katyal, Acting Solicitor General (Oct. 29, 2010). The amicus
curiae brief submitted for the United States primarily urges a remand
so that the District Court can give further consideration to the issue
of subject matter jurisdiction over the Republic and the Ministry. See
Brief for the United States at 6-20. The brief contended that the
District Court did not err in declining to dismiss on grounds of
either FNC, see id. at 21-27, or international comity, see id. at 27-
29. The parties have also submitted briefs commenting on the views of
the United States and letters responding to this Court’s inquiry as to
whether the three percent cap applies to funds of the Republic in the
United States. The Appellee contends that the cap statute does not
apply, see Letter from Atty. Thomas J. Hall to Catherine O’Hagan
Wolfe, Clerk (June 16, 2011), a contention that the Appellants do not
dispute, see Letter from Atty. Juan C. Basombrio to Catherine O’Hagan
Wolfe, Clerk (June 15, 2011).
Discussion
Although courts are normally obliged to consider issues of
subject matter jurisdiction prior to other issues, the Supreme Court
has approved the practice of this Court, see In re Arbitration Between
Monegasque de Reassurances S.A.M. v. NAK Naftogaz of Ukraine, 311 F.3d
488, 497-98 (2d Cir. 2002); In re Minister Papandreou, 139 F.3d 247,
255-56 (D.C. Cir. 1998), of exercising discretion to consider an FNC
dismissal without first adjudicating issues of subject matter
jurisdiction. See Sinochem International Co. v. Malaysia International
Shipping Corp., 549 U.S. 422, 429-34 (2007). We have concluded that
international comity.
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it is appropriate to do so in this case.
We review a district court’s rejection of an FNC claim for abuse
of discretion, but may reverse if we conclude that the court has made
an error of law. Moneagasque, 311 F.3d at 498.
The FNC standards concern both private and public interests. See
American Dredging Co. v. Miller, 510 U.S. 443, 448 (1994); Gulf Oil
Corp. v. Gilbert, 330 U.S. 501, 509-09 (1947); PT United Can Co. v.
Crown Cork & Seal Co., 138 F.3d 65, 74 (2d Cir. 1998). Among the
public interests are “a local interest in having localized
controversies decided at home,” Gilbert, 330 U.S. at 509, and the
interest in having foreign law interpreted by a foreign court, see PT
United Can, 138 F.3d at 74.
In the pending case, the District Court recognized that although
the Panama Convention establishes jurisdiction in the United States,
“‘there remains the authority to reject that jurisdiction for reasons
of convenience, judicial economy and justice.’” Figueiredo, 655 F.
Supp. 2d at 374-75 (quoting Monegasque, 311 F.3d at 497). The Court
then appropriately gave somewhat reduced deference to the foreign
plaintiff’s choice of forum, id. at 375 (citing Monegasque, 311 F.3d
at 498), and considered several private and public interest factors,
see id. at 376-77.
In considering the factor of the adequacy of an alternative
forum, the District Court concluded that although Peruvian law permits
execution of arbitral awards, “only a United States court ‘may attach
the commercial property of a foreign nation located in the United
States,’” id. at 375-76 (quoting TMR Energy Ltd. v. State Property
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Fund of Ukraine, 411 F.3d 296, 303 (D.C. Cir. 2005)). In deeming a
Peruvian forum inadequate for the stated reason, we think the District
Court erred. It is no doubt true that only a United States court may
attach a defendant’s particular assets located here, but that
circumstance cannot render a foreign forum inadequate. If it could,
every suit having the ultimate objective of executing upon assets
located in this country could never be dismissed because of FNC. Yet
in Monegasque, to cite a recent example, we upheld an FNC dismissal in
favor of suit abroad even though the plaintiff had obviously sought a
judgment in the United States in order to execute upon a foreign
government’s assets here.8
8
The Appellees contend that in Monegasque the debtor had no assets
in the United States. This assertion might be based on our
observation that “[t]he case before us simply has no connection with
the United States other than the fact that the United States is a
Convention signatory.” Monegasque, 311 F.3d at 500. That statement
might be understood to refer to the dispute between the parties, which
originally concerned a contract between a Russian company, AO Gazprom,
and a Ukrainian company, AO Ukragazprom, and ultimately between Nak
Naftogaz of Ukraine (“Naftogaz”), which assumed the rights and
obligations of Ukragazprom; Monde Re, a reinsurer of Gazprom; and
Ukraine. See id. at 491-92. Similar to the pending case, Monde Re
contended that Naftogaz was an “agent, instrumentality or alter ego of
Ukraine.” Id. at 492. Concerning assets in the United States, the
District Court in Monegasque stated that although “it is not clear
that Naftogaz has any assets in the United States[,] . . . [t]here is
no evidence before the Court [] to suggest that the arbitral award -
if confirmed here - would be easier to enforce against Ukraine in the
United States rather than in the Ukraine.” Monegasque, 158 F. Supp. 2d
at 386-87. The first clause leaves it uncertain whether Naftogaz had
any assets in the United States, but the second clause makes sense
only if Ukraine had some assets in both the United States and Ukraine.
The law review article that the Appellees cite for the proposition
that our decision in Monegasque “note[d] an absence of identifiable
property within [the United States],” William W. Park, “The
Specificity of International Arbitration: The Case for FAA Reform,” 36
Vand. J. Transnat’l L. 1241, 1264 (2003), Brief for Appellees at 59,
misstated our position and did so by relying only on the District
Court’s statement in Monegasque concerning property of Naftogaz,
omitting that Court’s more pertinent statement concerning enforcement
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“An alternate forum is adequate if the defendants are amenable to
service of process there, and if it permits litigation of the subject
matter of the dispute.” Pollux Molding Ltd. v. Chase Manhattan Bank,
329 F.3d 64, 75 (2d Cir. 2003) (citing Piper Aircraft Co. v. Reyno,
454 U.S. 235, 254 n.11 (1981)). Where adequacy of an alternative
forum is assessed in the context of a suit to obtain a judgement and
ultimately execution on a defendant’s assets, the adequacy of the
alternate forum depends on whether there are some assets of the
defendant in the alternate forum, not whether the precise asset
located here can be executed upon there. See Norex Petroleum Ltd. v.
Access Industries, Inc., 416 F.3d 146, 158 (2d Cir. 2005) (adequacy of
alternate foreign forum does not depend on “identical remedies”). And
the fact that a plaintiff might recover less in an alternate forum
does not render that forum inadequate. See Alcoa Steamship Co. v. M/V
Nordic Regent, 654 F.2d 147, 159 (2d Cir. 1980) (alternate forum not
inadequate although plaintiff might recover only $570,000 there,
rather than $8 million in the United States). To the extent that the
District of Columbia Circuit in TMR Energy considered a foreign forum
inadequate because the foreign defendant’s precise asset in this
country can be attached only here, we respectfully disagree.9
against Ukraine of an award in the United States. See Park, supra, at
1264 n.99.
9
We note that the District of Columbia Circuit relied on a
footnote in Piper Aircraft Co. v. Reyno, 454 U.S. 235, 254 n. 22, and
its own prior decision in El-Fadl v. Central Bank of Jordan, 75 F.3d
668, 677 (D.C. Cir. 1996). See TMR Energy, 411 F.3d at 303. Piper
Aircraft made the unexceptional observation that an alternative forum
would be inadequate if the remedy available there “is no remedy at
all,” 454 U.S. at 254. Footnote 22 provided examples where the
alternative forum “does not permit litigation of the subject matter of
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The parties recognize that public interest factors are to be
considered in determining whether an FNC dismissal is appropriate.
See Gilbert, 330 U.S. at 508-09; Iragorri v. United Technologies
Corp., 274 F.3d 65, 73-74 (2d Cir. 2001). The Appellants contend that
the cap statute is a relevant, perhaps decisive, public factor to be
weighed in the discretionary FNC decision. [Blue 53] The Appellee
responds that the cap statute cannot warrant FNC dismissal because
“such laws are contrary to the United States’ public policy in favor
of international arbitration.” Brief for Appellee at 63.
The parties are similarly at odds with respect to international
comity, which is the “recognition which one nation allows within its
territory to the legislative, executive or judicial acts of another
nation, having due regard both to international duty and convenience,
and to the rights of its own citizens or other persons who are under
the protection of its laws.” Hilton v. Guyot, 159 U.S. 113, 164
(1895); see JP Morgan Chase Bank v. Altos Hornos de Mexico, S.A. de
C.V., 412 F.3d 418, 423 (2d Cir. 2005). The Appellants point out that
a conflict between domestic and foreign law is an important criterion
for a comity dismissal, see Hartford Fire Insurance Co. v. California,
509 U.S. 764, 798 (1993); In re Maxwell Communication Corp., 93 F.3d
1036, 1047-48 (2d Cir. 1996), and contend that enforcement of the
Award in the United States cannot be achieved without disregarding
the dispute,” or where it is unclear whether the alternative forum
will even hear the case. See id. at 254 n.22. El-Fadl also noted
that an alternate forum is inadequate if it does not permit litigation
of the subject matter of the dispute, 75 F.3d at 677, and concluded
that Jordanian law constituted an “absolute prohibition” to the
plaintiff’s bringing suit in Jordan, id. at 678.
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Peru’s cap statute. [blue 54-55] The Appellee responds that comity
considerations, just like FNC considerations, do not warrant dismissal
on the ground of comity in view of the strong United States policy
favoring the enforcement of foreign arbitral awards, as made manifest
by adherence to the Panama Convention.
We agree with the Appellants that the cap statute is a highly
significant public factor warranting FNC dismissal. Although it
obviously has special significance for one of the parties in this
litigation, Peru, and to that extent differs from public factors such
as court congestion, see Gilbert, 330 U.S. at 508, which are
independent of particular litigants, there is nonetheless a public
interest in assuring respect for a sovereign nation’s attempt to limit
the rate at which its funds are spent to satisfy judgments.10
In the somewhat similar context of abstention, the Supreme Court
has observed that deferring to litigation in another jurisdiction is
appropriate where the litigation is “intimately involved with
sovereign prerogative” and it is important to ascertain the meaning of
another jurisdiction’s statute “from the only tribunal empowered to
speak definitively.” Louisiana Power & Light Co. v. City of Thibodaux,
360 U.S. 25, 28-29 (1959). The rate at which public funds may be
disbursed to satisfy public obligations is surely “intimately involved
with sovereign prerogative” and the Peruvian courts are “the only
tribunal[s] empowered to speak authoritatively” on the meaning and
operation of the cap statute.
10
A public interest of this sort is considerably broader than the
colloquial understanding of the word “convenient,” which may be one
reason why the phrase forum non conveniens is best rendered in Latin.
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With the underlying claim arising (1) from a contract executed in
Peru (2) by a corporation then claiming to be a Peruvian domiciliary
(3) against an entity that appears to be an instrumentality of the
Peruvian government, (4) with respect to work to be done in Peru, the
public factor of permitting Peru to apply its cap statute to the
disbursement of governmental funds to satisfy the Award tips the FNC
balance decisively against the exercise of jurisdiction in the United
States.
Despite these private and public factors favoring an FNC
dismissal, Figueiredo contends that FNC dismissal is not warranted
because of the interest of the United States favoring enforcement of
arbitration agreements in international contracts, see Scherk v.
Alberto-Culver Co., 417 U.S. 506, 520 n. 15 (1974), and the provision
of the Panama Convention authorizing enforcement of international
arbitration awards. See Panama Convention, Art. 4, Jan. 30, 1975,
O.A.S.T.S. No. 42. Although enforcement of such awards is normally a
favored policy of the United States and is specifically contemplated
by the Panama Convention, that general policy must give way to the
significant public factor of Peru’s cap statute. Moreover, Article 4
of the Convention explicitly provides that execution of international
arbitration awards “may be ordered . . . in accordance with the
procedural laws of the country where it is to be executed . . . .,”
and FNC is a doctrine “of procedure,” American Dredging Co. v. Miller,
510 U.S. 443, 453 (1994). See Monegasque, 311 F.3d at 495-96 (making
same point with respect to similar wording of the New York Convention,
June 10, 1958, 21 U.S.A. 2517, T.I.A.S. No. 6997, 330 U.N.T. 53.)
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The District Court also said that Peru should not be able to
prevail on the ground of FNC because it entered into the Panama
Convention, see Figueiredo, 655 F. Supp. 2d at 377, suggesting that
Peru thereby assumed the risk that any award against it would be
enforced in a signatory country like the United States. However, not
only does the Convention contemplate application of a signatory
forum’s procedural doctrines, as we have pointed out, but, in our
view, if comparative risks are to be assessed, Figueiredo took the
more significant risk of having collection of an award subject to the
cap statute when it entered into a contract with an entity that it
contends is an organ of the Peruvian government.
Conclusion
For all of the reasons stated, we conclude that the petition
should be dismissed on the ground of FNC.11 We direct that the
11
Judge Lynch’s well argued dissent merits a brief response.
First, he points out that Article V of the Panama Convention “was
intended to make[] it clear that once the procedural requirements for
enforcement are met no other grounds except those included in [Article
V] may be invoked as a defense.” Dissenting op. at [xx] (internal
quotation marks omitted). However, we are not invoking FNC as a
“defense.” Although the result of an FNC dismissal is undoubtedly a
declination to accord a plaintiff the relief sought, such a dismissal
is not the assertion of a defense on the merits. It simply denies
relief here, leaving a plaintiff free to seek enforcement of an award
elsewhere. There has been no refusal to recognize the Award.
Second, he cautions that courts should be wary of using FNC to
refer enforcement plaintiffs “back to the very courts they sought to
avoid.” Id. at [xx]. Although the parties’ contract permitted
arbitration and arbitration occurred, what the parties agreed to was
“to subject themselves to the competence of the Judges and Courts of
the City of Lima or the Arbitration Proceedings, as applicable.”
Moreover, after the Award was issued, the parties litigated in the
Court of Appeals in Lima the issue of whether the arbitration was a
“national arbitration” involving only domestic parties, an issue on
which Figueiredo prevailed.
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dismissal should be conditioned on the Appellants’ consent to suit in
Third, he says we have concluded that the three-percent cap
“should apply” to enforcement of the Award. Id. at [xx] (emphasis in
original). That overstates our view. As the dissent recognizes, we
have disclaimed making any determination as to exactly how the three
percent cap operates. Indeed, Figueiredo insists that there are
reasons why the cap will not be applied to the payment of whatever
judgment it ultimately obtains. We determine only that the existence
of a statute designed to protect the rate of payment of funds of a
sovereign state is a public interest factor that decisively tips the
FNC balance in a case where the parties and the underlying dispute
have no connection at all to this country.
Fourth, he contends that Peru is not an adequate forum because
Figueiredo “comes to us with the specific and narrow intent of
enforcing its arbitration award against Peru’s assets in the United
States.” Id. at [xx] But Figueiredo’s intent to collect the Award out
of assets in this country is merely the reason it sued here; it cannot
also be the reason why it is entitled to do so, at least when Peru’s
assets are located in an adequate forum elsewhere.
Fifth, he appears to describe the Court’s ruling as if it were a
disagreement with the District Court’s exercise of discretion in
weighing the FNC factors. In fact, we consider the District Court to
have committed legal errors both in deeming a Peruvian forum
inadequate and in declining to consider the three-percent cap to be a
public factor in the FNC balance.
Sixth, he suggests that an FNC dismissal, which might result in
having payment of the award subject to the three percent cap if
Figueiredo seeks to enforce the Award in Peru, amounts to “sleight of
hand,” id. at [xx], because a statute that does not apply here as a
matter of choice of laws would apply in Peru. But there is nothing
magical about that consequence, should it occur; it would be a routine
consequence of any FNC dismissal. Whenever a suit is dismissed on FNC
grounds in country A, where Country B’s procedural statute, like a
limitation on the rate of payment of a judgment, does not apply, and
the suit is refiled in country B, the procedural statute of country B
applies. Foreign procedural rules normally do not apply in domestic
lawsuits and normally do apply in the forum of the foreign state.
Finally, Judge Lynch points out the absence of authority for the
proposition that the three percent cap is a public interest factor in
the FNC balance. Since we are aware of no prior litigation in which
anyone has asserted that the three percent cap or any similar statute
limiting the rate of payment of a sovereign’s funds is a public
interest factor in the FNC balance, it is not surprising that no court
has ruled on the issue--either way. Every issue has to arise
somewhere for the first time.
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the courts of Peru, including a waiver of any otherwise applicable
statute of limitations,12 and subject to the further condition that if,
for any reason, the courts of Peru decline to entertain a suit to
enforce the Award, this lawsuit may be promptly reinstated in the
District Court.
Reversed and remanded with directions to dismiss the petition.
12
The Supreme Court has explicitly left open the question of
whether a court dismissing on the ground of FNC without ruling on
subject matter jurisdiction may condition the dismissal on waiver of
jurisdictional and limitations defenses in the foreign forum. See
Sinochem, 549 U.S. at 435. Until authoritatively advised that this
practice is impermissible, we will continue to approve such waivers,
see Calavo Growers of California v. Generali Belgium, 632 F.2d 963,
968 & n.6 (2d Cir. 1980) (remanding FNC dismissal to be conditioned on
willingness of foreign court to hear case and consent of defendants to
submit to foreign court’s jurisdiction); Schertenleib v. Traum, 589
F.2d 1156, 1163 (2d Cir. 1978) (FNC dismissal conditioned on consent
to jurisdiction in foreign forum); cf. Bank of Credit and Commerce
International (Overseas) Ltd. v. State Bank of Pakistan, 273 F.3d 241,
247 (2d Cir. 2001) (recommending condition “to deal with the
potentially serious problem of congestion and delay in [alternate
forum’s] courts”).
-17-
GERARD E. LYNCH, Circuit Judge, dissenting.
By acceding to the Inter-American Convention on International Commercial
Arbitration (“Panama Convention”), our country has committed itself to open our courts
to the enforcement of international arbitral awards as if they were foreign judicial
judgments. This commitment requires us to recognize and enforce international arbitral
awards in the vast majority of cases. Today, however, the majority concludes that this
commitment may be trumped by a Peruvian statute limiting the portion of its annual
budget that an entity of the state may pay towards the satisfaction of a lawfully obtained
arbitration award. Neither the majority nor any party argues that this foreign statute
operates on our soil of its own force. Nor could they; it is well established that, with few
exceptions, none of which are relevant here, forum law governs the enforcement of
foreign judgments, even when resolution of the underlying dispute turned on the law of
another jurisdiction. See Restatement (Second) of Conflict of Laws § 99 (1969) (“The
local law of the forum determines the methods by which a judgment of another state is
enforced.”). Rather, the majority concludes that Peru’s three-percent cap on the payment
of judgments is a public interest factor – indeed, the dispositive factor – weighing in
favor of a forum non conveniens dismissal. Because I question both the applicability of
the forum non conveniens doctrine on the facts of this case and the majority’s conclusion
that the relevant considerations weigh in favor of dismissal, I respectfully dissent.
At the outset, it is important to emphasize that this is simply an action to confirm
an award to which the plaintiff is unquestionably entitled. If Figueiredo had sought to
adjudicate the underlying merits of its dispute with Peru (or its agency, the “Program”) in
an American court, the forum non conveniens doctrine would have obvious bite: neither
party has any particular connection to the United States; the locus of the transaction was
entirely domestic to Peru; none of the witnesses or documents relevant to resolving the
dispute is located here; and the United States has no interest in the dispute, while Peru has
a significant interest. But that is emphatically not this case. The adjudication of the
merits has already taken place, in the arbitral forum that the parties themselves
contractually selected, and the plaintiff has prevailed. What Figueiredo seeks now is
simply the right to enforce the award that it has already received from the arbitration
panel and that the United States has committed by treaty to honor. Because I believe that
we should respect that right and honor that commitment, I respectfully dissent.
I. The Availability of Forum Non Conveniens in Arbitration Enforcement Proceedings
Under the Panama Convention
By using the mechanism of forum non conveniens to import a substantive and self-
serving provision of Peruvian law into what should properly be a summary proceeding,
the majority significantly undermines the background expectations against which the
parties made their contract. As the Supreme Court has recognized, “uncertainty will
almost inevitably exist with respect to any contract touching two or more countries, each
with its own substantive laws and conflict-of-laws rules. A contractual provision
specifying in advance the forum in which disputes shall be litigated and the law to be
applied is, therefore, an almost indispensable precondition to achievement of the
orderliness and predictability essential to any international business transaction.” Scherk
2
v. Alberto-Culver Co., 417 U.S. 506, 516 (1974). Increasingly, the forum that is specified
in such agreements is international arbitration. Between 1993 and 2003, the number of
international arbitrations overseen by the leading arbitral institutions nearly doubled, and
as of 2005 it was estimated that nearly ninety percent of transnational commercial
contracts contained an arbitration provision. See Christopher R. Drahozal, New
Experiences of International Arbitration in the United States, 54 Am. J. Comp. L. 233,
233 & n.1 (2006).
Parties that contract across national lines choose to resolve their disputes via
arbitration for many reasons. But no doubt one of the most important – particularly,
though not exclusively, where one party is a sovereign – is that they do not necessarily
trust the court systems of the relevant countries, and believe that the arbitral forum
provides more reliable justice. See, e.g., H. M. Holtzmann, Arbitration: An Indispensable
Aid to Multinational Enterprise, 10 J. Int’l L. & Econ. 337, 337-38 (1975) (noting that
“[w]hen disputes arise, the multinational corporation is usually unwilling to go to the
courts of the government with whom it is in conflict”); see also Leonard V. Quigley,
Accession by the United States to the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, 70 Yale L.J. 1049, 1051 (1961) (“The
businessman doing business in several countries has an additional reason for preferring
arbitration to local judicial remedies – the fear of discrimination against the foreigner,
consciously felt in actual bias or unconsciously exhibited by preference for local
principles of law.”).
3
But because arbitrators have no power to enforce their judgments, international
arbitration is viable only if the awards issued by arbitrators can be easily reduced to
judgment in one country or another and thereby enforced against the assets of the losing
party. Until relatively recently, a party that had prevailed in an international arbitration
faced significant uncertainty in its efforts to satisfy its award. In some jurisdictions,
enforcement required a full trial on the merits of the underlying dispute. See Quigley,
supra, at 1051 & n.15. At a minimum, many countries maintained procedures for the
enforcement of foreign awards that were substantially more onerous than those that
applied to domestic awards. Id.; see also Ernest G. Lorenzen, Commercial Arbitration –
Enforcement of Foreign Awards, 45 Yale L.J. 39, 44 (1935) (describing procedures).
Efforts to negotiate bilateral enforcement treaties advanced slowly and resulted in a
patchwork of differing regimes and substantial uncertainty as to which contracts and
awards would be covered where. Quigley, supra, at 1051-54. The so-called Geneva
Treaties, concluded in the 1920s under the auspices of the League of Nations, represented
an early attempt to achieve a multilateral solution. See Protocol on Arbitration Clauses,
Sept. 24, 1923, 27 L.N.T.S. 157; Convention on the Execution of Foreign Arbitral
Awards, Sept. 26, 1927, 92 L.N.T.S. 301. These agreements, however, were roundly
criticized for, among other things, failing to receive the assent of important states
(including the United States), lacking clarity as to the types of arbitrations covered, and
placing excessive burdens on the party seeking to compel arbitration. See Paolo Contini,
International Commercial Arbitration: The United Nations Convention on the
4
Recognition and Enforcement of Foreign Arbitral Awards, 8 Am. J. Comp. L. 283, 289
(1959). Most importantly for these purposes, “the possibility of contesting the validity of
an award on grounds other than those listed in the [Geneva] Convention [was] regarded as
making it too easy for a recalcitrant defendant to avoid the enforcement of an award by
resorting to obstructionist tactics.” Id.
The Panama Convention and its predecessor agreement, the United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York
Convention”), were designed to overcome these obstacles. As the Supreme Court has
noted, “[a] parochial refusal by the courts of one country to enforce an international
arbitration agreement,” and a fortiori an arbitration award, not only undermines business
confidence, but also “invite[s] unseemly and mutually destructive jockeying by the parties
to secure tactical litigation advantages.” Scherk, 417 U.S. at 516-17. This dynamic, in
turn, threatens to “damage the fabric of international commerce and trade, and imperil the
willingness and ability of businessmen to enter into international commercial
agreements.” Id. at 517. It was precisely these concerns that motivated the drafters of the
New York Convention, at the urging of the International Chamber of Commerce, to craft
a document that would carefully circumscribe the bases on which the courts of a signatory
nation could disregard an arbitration provision or refuse to enforce an arbitral award.
Thus, the committee report that accompanied the initial draft of the treaty emphasized that
the inclusion of the word “only” in what is now Article V was intended to “make[] it
clear” that once the procedural requirements for enforcement are met “no other grounds
5
except those included in this article may be invoked as a defense.”1 U.N. Econ. & Soc.
Council, Report of the Committee on the Enforcement of International Arbitration
Awards 9, U.N. Doc. E/2704 (Mar. 28, 1055), available at http://www.uncitral.org/pdf/
english/travaux/arbitration/NY-conv/e-ac/eac424r1-N5508097.pdf. Like the New York
Convention on which it was modeled, the Panama Convention clearly and emphatically
limits the grounds on which a signatory state may refuse to recognize an arbitration
award. Under Article V of the treaty, “[t]he recognition and execution of the decision
may be refused, at the request of the party against which it is made, only if such party is
able to prove” the existence of certain carefully specified defenses. Panama Convention
art. V, opened for signature Jan. 30, 1975, O.A.S.T.S. No. 42, 1438 U.N.T.S. 245
(emphasis added).
It is beyond question that the Peruvian statute limiting the amount that government
agencies can be compelled to pay on judgments against them is not, of its own force, a
basis for an American court to refuse to enforce an arbitration award against a Peruvian
governmental entity, and the majority does not suggest otherwise. Rather, it declines to
enforce the award on the ground of forum non conveniens, though – as discussed below –
it then distorts that doctrine by making its application turn entirely on that very provision
1
In its current form, Article V of the New York Convention provides that
“[r]ecognition and enforcement of the award may be refused, at the request of the party
against whom it is invoked, only if that party furnishes to the competent authority where
the recognition and enforcement is sought, proof” of one of seven specifically enumerated
defects. New York Convention art. V, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 3
(emphasis added).
6
of Peruvian law.
Given that forum non conveniens is not listed as a defense to enforcement in either
the New York or the Panama Convention, a strong case can be made that, by acceding to
the treaties, the United States has made the doctrine inapplicable to enforcement
proceedings that they govern. Moreover, because forum non conveniens is a
discretionary doctrine that resists attempts “to catalogue the circumstances which will
justify or require either grant or denial of [the] remedy,” Gulf Oil Corp. v. Gilbert, 330
U.S. 501, 508 (1947), superseded on other grounds by 20 U.S.C. § 1404, its application in
these circumstances would seem to dramatically undercut the treaty drafters’ efforts to
foster confidence in the reliability and efficacy of international arbitration. For these
reasons, the Ninth Circuit has rejected the application of forum non conveniens in the
related context of actions governed by the Warsaw Convention,2 noting that the treaty’s
purpose of achieving predictability and uniformity of results would be undermined by a
doctrine “that itself is ‘vague and discretionary,’ and that ‘is most unlikely to produce
uniform results.’” Hoska v. United Airlines, Inc., 305 F.3d 989, 997 (9th Cir. 2002),
quoting United States v. Nat’l City Lines, 334 U.S. 573, 581 (1948) and Am. Dredging
Co. v. Miller, 510 U.S. 443, 453 (1994).
2
The Convention for the Unification of Certain Rules Relating to International
Transportation by Air or “Warsaw Convention” is “a multilateral treaty that regulates,
inter alia, liability for international air carriers.” Avero Belgium Ins. v. American
Airlines, Inc., 423 F.3d 73, 75 n.2 (2d Cir. 2005); see Convention for the Unification of
Certain Rules Relating to International Transportation by Air, Oct. 12, 1929, 49 Stat.
3000 (1934), 137 L.N.T.S. 11.
7
Applying forum non conveniens to enforcement actions is inconsistent with the
New York and Panama Conventions in another way as well. In addition to limiting
states’ discretion to deny enforcement in individual cases, the treaties seek “to unify the
standards by which agreements to arbitrate are observed and arbitral awards are enforced
in the signatory countries.” Scherk, 417 U.S. at 520 n.15. Forum non conveniens,
however, is unknown in civil law countries. See Ronald Brand, Comparative Forum Non
Conveniens and the Hague Covention on Jurisdiction and Judgments, 37 Tex. Int’l L.J.
467, 468 (2002). Consequently, applying the doctrine to enforcement actions in the
United States – particularly in the expansive manner that the majority employs it here –
introduces a highly significant inconsistency into the international regime of reciprocal
enforcement that is unlikely to have been anticipated by the treaties’ drafters and
signatories at the time the treaties were concluded. Indeed, broad application of forum
non conveniens would seem to dramatically undermine this country’s obligations under
the treaties to grant enforcement in most cases, since by definition many if not most of the
disputes subject to international arbitration involve foreign parties engaged in disputes
whose center of gravity is outside of the United States.
That is not only my analysis; it is also the position taken by the draft Restatement
(Third) of the U.S. Law of International Commercial Arbitration (Council Draft No. 2,
Sept. 27, 2010). Section 5-21(a) of the Restatement flatly states that “[a]n action to
enforce a [New York or Panama] Convention award is not subject to a stay or dismissal
on forum non conveniens grounds.” The accompanying Reporters’ Note explains that
8
[c]onsidering that the Convention grounds for nonrecognition
and nonenforcement are meant to be exclusive, it would be
incompatible with Convention obligations for a court of a
Contracting State to employ inconvenience as an additional
basis for dismissing an action for enforcement of an award
that is otherwise entitled, as a matter of treaty obligation, to
enforcement.
Id., Reporters’ Note (a), at 245.3
The majority nevertheless concludes that forum non conveniens is applicable to
this case, because it is a “procedural law,” compliance with which may act as a bar to the
enforcement of an arbitral award, even where none of the enforcement limitations
explicitly set out in Article V applies. See Panama Convention art. IV (noting that an
arbitral decision’s “execution or recognition may be ordered in the same manner as that of
decisions handed down by national or foreign ordinary courts, in accordance with the
procedural laws of the country where it is to be executed”) (emphasis added). In so
concluding, the majority is on firm precedential ground in this Circuit. In In re
Arbitration Between Monegasque de Reassurances S.A.M. v. Nak Naftogaz of Ukraine
(“Monegasque”),4 our Court concluded that a similar provision in the New York
3
This draft of the Restatement achieved final approval by the Council of the
American Law Institute (“ALI”) in December 2010 and thus constitutes the most current
iteration of the Institute’s official position. At any rate, I here seek to invoke not so much
the prestige of the ALI as the cogency of the analysis set forth by the Reporters in support
of their position.
4
The government’s brief and some of the secondary literature refer to the case as
“Monde Re,” the short name that Monegasque used for itself during the litigation in our
Court. See generally Monegasque, 311 F.3d 488 (referring to the company as “Monde
9
Convention requiring enforcement “in accordance with the rules of procedure” of the
forum permitted the district court to dismiss an enforcement action on forum non
conveniens grounds. See 311 F.3d 488, 495-97 (2d Cir. 2002).
I recognize that Monegasque is a binding precedent of this Court and that,
although interpreting a different treaty, it fairly implies that forum non conveniens will be
an available ground for declining to recognize an arbitration award under the Panama
Convention. I note, however, that there are substantial reasons to think that Monegasque
was wrongly decided. In addition to the considerations expressed above, which are
rooted in the purposes of the treaties and the interests of the contracting parties, I question
whether the treaties’ references to “procedural laws” and “rules of procedure” can bear
the weight that the Monegasque court and, today, the majority put on them. Though it is
true that the Supreme Court has labeled forum non conveniens a “doctrine . . . of
procedure” for federal preemption purposes, see Am. Dredging Co., 510 U.S. at 453,
there is little reason to think that the drafters of the treaties, who were drawn from a
variety of legal traditions, considered what impact this rather technical and distinctly
American use of the term might have on the enforceability of international arbitration
awards.
The Monegasque court supported its interpretation of the treaty by noting that the
drafters of the New York Convention had considered and rejected a proposal to adopt a
Re”).
10
procedure for enforcement that would be uniform across all of the signatory states. Yet,
examined in context, the source upon which the court relied makes clear that the
procedural variations envisioned were of a much more technical nature and pertained
chiefly to whether a signatory country could treat international awards differently from
domestic ones. See Quigley, supra, at 1065 (citing as one such procedural idiosyncrasy
the fact that El Salvador and Sweden require foreign awards to “be submitted to the Court
for a determination whether the requirements of relevant international instruments had
been satisfied, while domestic awards are granted summary execution”). Indeed, prior to
Monegasque, “most observers considered that [the ‘procedure’] provision related to the
form of enforcement, not the conditions for enforcement.” William W. Park, Respecting
the New York Convention, 18 ICC Int’l Ct. of Arb. Bull. 65, 70 (2007). In other words,
the “procedure” provisions of the treaties permit variation with regard to the manner in
which signatory states enforce international arbitration awards; they do not provide a
means by which a state may decline to enforce such awards at all.
Based on these observations and others, a number of commentators have argued
that our decision in Monegasque places the United States in breach of its treaty
obligations under the New York (and now Panama) Convention. See, e.g., William W.
Park & Alexander A. Yanos, Treaty Obligations and National Law: Emerging Conflicts
in International Arbitration, 58 Hastings L.J. 251, 255-56 (2006); Int’l Commercial
Disputes Comm., Ass’n of the Bar of N.Y.C., Lack of Jurisdiction and Forum Non
11
Conveniens as a Defense to the Enforcement of Foreign Arbitral Awards, 15 Am. Rev.
Int’l Arb. 407, 428 (2004); Pelagia Ivanova, Note, Forum Non Conveniens and Personal
Jurisdiction: Procedural Limitations on the Enforcement of Foreign Arbitral Awards
Under the New York Convention, 83 B.U. L. Rev. 899, 907-11, 920 (2003).
For these reasons, if I were free to consider this issue as one of first impression, I
would be inclined to conclude, contrary to Monegasque, that the doctrine of forum non
conveniens is not available at all in an action such as this one. While I am not free to
reconsider the holding of Monegasque, perhaps these observations will be of use in
persuading other courts that are not bound by its authority to give further thought to this
issue.
II. The Application of Forum Non Conveniens to the Present Case
Even accepting, as I am bound by precedent to do, that forum non conveniens may
be asserted as a ground for refusing to enforce an arbitral award under the Panama
Convention, I am persuaded that the majority misapplies the doctrine in this case. First,
the considerations that militate against applying the doctrine at all also counsel against
invoking it to dismiss an enforcement action governed by the Convention in all but the
most exceptional of cases. Second, even giving no weight whatsoever to the
considerations that powerfully suggest particular restraint in applying the doctrine in this
context, the majority’s view seems to me an incorrect application of the doctrine under
established law. Before addressing these issues, however, it is important to point out that
12
the present case is clearly distinguishable from Monegasque, the only previous case in
which we have found that forum non conveniens supported dismissal of an action to
enforce an arbitral award. Several factors that weighed heavily in favor of dismissal in
Monegasque are absent from this case.
First, and perhaps most importantly, Monegasque affirmed a district court’s
dismissal on the basis of forum non conveniens, while here the majority reverses the
district court’s decision to entertain an action over which it undisputedly had jurisdiction.
It is well established that federal courts have a “virtually unflagging obligation . . . to
exercise the jurisdiction given them.” Colo. River Water Conservation Dist. v. United
States, 424 U.S. 800, 817 (1976). The forum non conveniens doctrine represents a
narrow exception to this rule rooted in “the inherent power of the courts to manage their
own affairs so as to achieve the orderly and expeditious disposition of cases.”
Monegasque, 311 F.3d at 497 (internal quotation marks omitted). Because it is primarily
a doctrine of case management, we have emphasized that the district court’s decision on a
motion to dismiss for forum non conveniens is entitled to considerable deference. In
Iragorri v. United Technologies Corp., this Court, sitting en banc, stated in a unanimous
opinion:
The decision to dismiss a case on forum non conveniens
grounds lies wholly within the broad discretion of the district
court and may be overturned only when we believe that
discretion has been clearly abused. In other words, our
limited review encompasses the right to determine whether
the district court reached an erroneous conclusion on either
13
the facts or the law, or relied on an incorrect rule of law in
reaching its determination. Accordingly, we do not, on
appeal, undertake our own de novo review, simply
substituting our view of the matter for that of the district
court.
274 F.3d 65, 72 (2d Cir. 2001) (ellipses, brackets, and internal citations omitted)
(emphasis in the original).
In light of the broad discretion of the district court in these matters and the general
obligation of federal courts to accept the jurisdiction that Congress gives them, it is
unsurprising that, although this Court has reversed a district court’s decision to grant a
motion to dismiss on the basis of forum non conveniens in ten prior cases, I have not
identified even a single case in which we have found fault with a district court that denied
such a motion. This case therefore represents a first for our Court, a fact that should give
the majority pause.
Monegasque is distinguishable from this case in other respects as well. The
Monegasque court emphasized at length the legal and factual difficulties that were
presented by the plaintiff’s efforts to impute the primary defendant’s contractual liability
to its sovereign parent, the Ukraine. The court emphasized that the case “[did] not lend
itself to summary disposition,” because “extensive discovery” and a trial would likely be
required to properly adjudicate the plaintiff’s claim of non-signer liability. 311 F.3d at
500. Given that the relevant witnesses and documents were located in the Ukraine, the
court concluded that these complications were important private interest factors weighing
14
heavily in favor of dismissal. Id. Although Peru argues that similar considerations
counsel dismissal in this case, the district court, after carefully considering the issue,
concluded that “whether the Award can be confirmed against the Republic is a question
that can be, and has been, decided by this Court without extensive discovery.” Figueiredo
Ferraz Consultoria e Engenharia de Projeto Ltda. v. Republic of Peru, 655 F. Supp. 2d
361, 376 (S.D.N.Y. 2009). The district court thus found that, unlike the situation in
Monegasque, the issues presented by this case did not require extensive and complex
proceedings that would more easily be held in some other forum.
The majority finds no fault with that analysis, and offers no suggestion that the
district court erred, as a matter of fact or law, in holding that this case, unlike
Monegasque, can be resolved in the Southern District of New York without undue
inconvenience to either party or to the court.5 Rather, the majority rests its decision on
the argument that “the three percent cap is a highly significant public factor” that itself
justifies overturning the district court. Majority Op., ante at [15]. But the majority’s
position – that a substantive law that is favorable to one of the parties is a public interest
factor that may count in the forum non conveniens balance if that party is also a sovereign
– finds no support in Monegasque or any other case of which I am aware. To the
5
If we were to conclude that the district court properly declined to dismiss the
case, we would be required to determine whether it erred in concluding that the
Program’s liability on the arbitration award could be imputed to the Republic. Because
the majority’s resolution of the case does not require it to reach this question, I express no
view on the merits of it.
15
contrary, the Supreme Court has specifically held that whether the alternative forum’s
substantive law is more or less favorable to the party seeking dismissal is not a factor that
the district court may consider in deciding a forum non conveniens motion. See Piper
Aircraft Co. v. Reyno, 454 U.S. 235, 247-49 (1981). And, indeed, the court in
Monegasque made clear that its decision was not premised on any concern that U.S. law
was less favorable to the sovereign defendants than Ukranian law by pointing out that
“Ukrainian law specifically provides for the execution of judgments against government
properties,” apparently without limitation. 311 F.3d at 499. Thus, although Monegasque
precludes a holding that forum non conveniens is simply inapplicable to this case, it does
not dictate the result that the majority reaches today.
Moreover, nothing in Monegasque is inconsistent with the view that courts must
be cautious in applying forum non conveniens in the context of actions to enforce
arbitration awards under the New York and Panama Conventions, and must not be misled
into assuming that dismissal is required simply because the underlying dispute has little or
no nexus to the United States. Such caution is amply warranted in light of the text and
the history of the Conventions as well as the need to ensure the dependability and
impartiality of international arbitration so as to promote transnational commerce. See
Scherk, 417 U.S. at 517. The entire point of the Conventions is to “assure transacting
businesses that arbitration clauses and arbitral awards will be enforced, and that rules of
procedural fairness will be observed.” H.R. Rep. No. 101-501, at 5 (1990) (advocating
16
implementation of the Panama Convention). The value of international arbitration,
especially in contracts involving sovereign states, is that it provides a mechanism by
which commercial actors may avoid the “home court advantage” of proceeding in the
courts of an adversary state. But this advantage is negated if a party may obtain an
independent adjudication on the merits, but is prevented from enforcing any award it
obtains anywhere but in the courts of the very country that is to pay the award. The
Convention seeks to open the doors of foreign courts to efforts to enforce arbitration
awards wherever assets are available, free of local prejudice or obstructive local rules that
make enforcement difficult in the courts of the adversary state.
Accordingly, even on the assumption that in some circumstances a court in a
signatory state may invoke forum non conveniens in declining to entertain an
enforcement action, we should be especially wary of applying that doctrine expansively
or in novel ways that suggest that enforcement plaintiffs should be referred back to the
very courts they sought to avoid in resorting to arbitration.6
Yet even apart from the special considerations dictated by the Panama Convention,
I cannot conclude, based on a standard application of the forum non conveniens doctrine,
that the district court abused its discretion in declining to dismiss this case. Dismissal on
6
The majority notes that the contract between the parties did not completely
foreclose resort to the Peruvian courts. Majority Op., ante at [17 n.12] True, but hardly
relevant. Figueiredo bargained for and received the right to resort to arbitration and chose
to exercise that right, thus channeling this dispute to an arbitration panel in preference to
the courts of Peru.
17
the basis of forum non conveniens is permissible only “when trial in the chosen forum
would establish oppressiveness and vexation to a defendant out of all proportion to
plaintiff’s convenience, or when the chosen forum is inappropriate because of
considerations affecting the court’s own administrative and legal problems.” Piper, 454
U.S. at 241 (internal quotation marks and ellipses omitted). The somewhat unusual facts
of Monegasque notwithstanding, it will seldom be the case that these conditions are
satisfied in a suit to enforce an international arbitration award.7
Again, the essentially summary nature of enforcement proceedings matters.
Forum non conveniens is intended to minimize practical problems so as to “make trial of
a case easy, expeditious and inexpensive.” Gulf Oil, 330 U.S. at 508 (emphasis added).
But in a summary proceeding to confirm an arbitration award, “the proof and logistics
factors attendant to trial are non-existent.” Melton v. Oy Nautor Ab, No. 97-15395, 1998
WL 613798, at *2 (9th Cir. Aug. 10, 1998) (Tashima, J., dissenting). In this case, for
example, there was only one substantive issue before the district court, a pure question of
law as to whether the Program was an organ of the Peruvian state rather than a state
“instrumentality” having an independent existence. The district court did not find that a
7
The draft Restatement supports that view as well: in recognizing the possibility of
forum non conveniens dismissals in suits to enforce international arbitration awards that
are not subject to the Conventions, the Restatement takes the position that even in that
context, forum non conveniens motions should “rarely be granted.” Restatement (Third)
of the U.S. Law of International Commercial Arbitration (Council Draft No. 2, Sept. 27,
2010) § 5-21(b), Reporters’ Note (b), at 246.
18
particularly difficult issue or one that was more expensive or difficult to litigate in the
United States than in Peru, and the majority does not suggest that it disagrees. As a
sovereign state with substantial resources and with significant commercial interests in the
United States, Peru (unlike some private parties) was amply able to litigate those
questions here. I therefore fail to see how allowing this proceeding to go forward in this
country would “establish oppressiveness and vexation” to Peru as a litigant. Nor does
this case present obvious “administrative and legal problems” for the district court. The
United States District Court for the Southern District of New York is a very busy court,
but one more case – particularly one as summary and simple as this one – will hardly tax
its capacities. Indeed, the district court (which is far better positioned than we are to
make the determination) seems to have concluded as much in declining to dismiss the
case on forum non conveniens grounds.
Nonetheless, the Court holds today, apparently for the first time in its history, that
the district court’s decision to retain jurisdiction over the case “cannot be located within
the range of permissible decisions,” Zervos v. Verizon N.Y., Inc., 252 F.3d 163, 169 (2d
Cir. 2001). It reaches this result by way of logic that is unprecedented and, I believe,
specifically foreclosed by controlling Supreme Court law. Despite recognizing (as do the
parties) that Peru’s three-percent judgment cap does not apply here as a matter of choice
of law, the majority nevertheless concludes that the cap should apply to this proceeding
and that its inapplicability here renders the United States an inconvenient forum. As a
19
result, the plaintiff is left to seek its remedy in the Peruvian courts – the very forum it
entered arbitration to avoid – where the cap undisputedly will apply. The majority is
aware of course that, under Piper v. Reyno, “[t]he possibility of a change in substantive
law should ordinarily not be given conclusive or even substantial weight in the forum non
conveniens inquiry.” 454 U.S. at 247. It therefore achieves this result by a sleight of
hand: asserting that although, in the normal course, forum non conveniens is self-
consciously blind to how dismissal will affect the substantive law that governs the case,
when one of the parties is a sovereign, substantive legal issues may be transformed into
public interest factors and considered in the analysis.
This position finds no support in Piper, Monegasque, or any other judicial
precedent of which I am aware. The absence of authority is unsurprising. As is clear
from its very name (whether rendered in Latin or English),8 the doctrine of forum non
conveniens is properly a neutral procedural rule that selects a forum based on
convenience, not a device for steering parties to the forum that is likely to apply the
substantive law that one or the other of them favors (or that judges in the forum court
think is desirable).
8
At the risk of seeming not to appreciate the wry humor of the Court’s footnote,
see Majority Op., ante at [15 n.10], I would point out that denominating a doctrine in
Latin should not obscure its meaning: forum non conveniens means “inconvenient
forum,” pure and simple. And, as discussed below, whether the title is stated in Latin or
in English, the questions asked under the doctrine are indeed those suggested by the
name.
20
Focusing on the factors that the Supreme Court has said that courts may consider
as part of the forum non conveniens analysis makes it clear both that this is so and that the
district court did not abuse its discretion in declining to dismiss this case. In considering
whether dismissal on forum non conveniens grounds is appropriate, a district court first
“determines the degree of deference properly accorded the plaintiff’s choice of forum”;
second, “it considers whether the alternative forum proposed by the defendants is
adequate to adjudicate the parties’ dispute”; and finally, it “balances the private and
public interests implicated in the choice of forum.” Norex Petroleum Ltd. v. Access
Indus., 416 F.3d 146, 153 (2d Cir. 2005).
At the first step, we must always start with “a strong presumption in favor of the
plaintiff’s choice of forum,” Piper, 454 U.S. at 255, but the ease with which this
presumption may be overcome will vary depending on the particular facts of each case.
The ultimate inquiry is whether “considerations of convenience” motivated the plaintiff’s
choice of a U.S. forum or whether, instead, that choice “was motivated by forum-
shopping reasons.” Iragorri, 274 F.3d at 72. Although, as a general matter, “when a
foreign plaintiff chooses a U.S. forum, it is much less reasonable to presume that the
choice was made for convenience,” id. at 71 (internal quotation marks omitted), “[i]t is
not a correct understanding of the rule to accord deference only when the suit is brought
in the plaintiff’s home district,” id. at 73. “Rather, the court must consider a plaintiff’s
likely motivations in light of all the relevant indications.” Id. “[T]he greater the
21
plaintiff’s or the lawsuit’s bona fide connection to the United States and to the forum of
choice . . . , the more difficult it will be for the defendants to gain dismissal for forum non
conveniens.” Id. at 72 (footnote omitted, emphasis added).
Both the district court and the majority assign reduced deference to Figueiredo’s
choice of forum due to the fact that it is a foreign plaintiff, but I question whether that
determination is correct in light of the intimate connection between the Southern District
of New York and this lawsuit – which is concerned exclusively with the plaintiff’s ability
to enforce its award against U.S.-based assets of the defendant. Monegasque does not
suggest otherwise. It is true that in that case – which, like this one, was an action to
enforce an arbitral award – we said that the foreign plaintiff’s choice of forum was
entitled to “little deference.” 311 F.3d at 499. But in so concluding, we emphasized that
Monegasque’s motivation in bringing its enforcement proceeding in the United States
was “not apparent,” and that “the jurisdiction provided by the [New York] Convention
[was] the only link between the parties and the United States.” Id. Here, in contrast,
Figueiredo has identified specific assets in the United States against which it hopes to
levy, thereby making the nexus between this action and the United States very tight
indeed.9
9
Although the majority plumbs the record in Monegasque in an effort to support
its assertion that the plaintiffs in that case likewise sought to collect against specific
U.S.-based assets, it ultimately can muster nothing more than speculation based on a
statement in the district court’s opinion that is at best ambiguous. See Majority Op., ante
at [12 n.8]. Even if the majority were correct, however, that the Monegasque plaintiffs
22
Nor is this consideration canceled, in my view, by the defendants’ accusation that,
in seeking enforcement here, “Figueiredo is engaged in blatant forum shopping” of the
sort that in Iragorri we found to counsel against deference to the plaintiff’s choice of
forum. See Iragorri, 274 F.3d at 72. I understand the argument that the desire to enforce
the award against assets in a jurisdiction that is unlikely to apply Peru’s judgment cap
might be considered seeking a “tactical advantage resulting from local laws that favor the
plaintiff’s case,” id. But the Supreme Court has stated that the consideration of where a
judgment may be most enforceable is a legitimate criterion for a plaintiff to consider in
choosing a forum. See Gulf Oil, 330 U.S. at 508. In light of that principle, I cannot agree
that the plaintiff’s choice of a U.S. forum was motivated by illegitimate considerations.
That a party hopes to secure expedient and full enforcement of a judgment or arbitration
award by litigating in a forum with favorable rules for such enforcement does not render
its choice of forum illegitimate. Rather, it is improper for a party to choose a forum that
presents logistical obstacles for its adversary, making a fair adjudication more difficult –
where the plaintiff is motivated by the “pursuit not simply of justice but of justice blended
with some harassment,” Norex, 416 F.3d at 155 (internal quotation marks omitted).
There is no indication in this case that Figueiredo is so motivated or that its choice of
sought to collect against identified assets, that would not establish that the parties actually
litigated whether the presence of those assets supported a presumption in favor of a
U.S.-forum and whether their absence from the Ukraine rendered that forum an
inadequate alternative. Indeed, the cursory discussion of this issue in our opinion, see
Monegasque, 311 F.3d at 497, suggests that they did not.
23
forum in fact presents such difficulty to Peru as a litigant.
In any case, the majority does not challenge the district court’s ultimate conclusion
that the plaintiff’s choice of forum was entitled to at least some deference. And even if
the Court were to conclude that that choice is entitled to no deference at all, this factor
would merely be neutral and would not tip in favor of dismissing the case.
The second step in the forum non conveniens analysis is to assess the adequacy of
the alternative forum. This issue too is affected by a proper understanding of the
summary nature of arbitration enforcement proceedings. The D.C. Circuit has ruled that
where a plaintiff seeks to confirm an arbitral award against U.S. assets, and those assets
can be reached only via a U.S. court judgment (which is the case when dealing with
foreign sovereigns), then an alternative forum elsewhere is inadequate. See TMR Energy
Ltd. v. State Prop. Fund of Ukraine, 411 F.3d 296, 303-04 (D.C. Cir. 2005). The majority
rejects this argument on the ground that, if it were correct, “every suit having the ultimate
objective of executing upon assets located in this country could never be dismissed
because of [forum non conveniens].” Majority Op., ante at [11]. That need not
necessarily be so. If this were a case in which liability on the merits had yet to be
established, Figueiredo’s “ultimate objective” in having any prospective award enforced
in the United States would be vague and contingent. The weight of such an action would
be concentrated on the yet-to-be-decided issues of underlying liability, and it therefore
might be reasonable to conclude that Peru is a perfectly adequate alternative forum in
24
which to resolve that issue.
But that is not this case. The merits of the underlying dispute have already been
decided, and Figueiredo comes to us with the specific and narrow intent of enforcing its
arbitration award against Peru’s assets in the United States, as it is entitled to do under the
Panama Convention. The resolution of that issue is not amenable to jurisdiction
elsewhere.10 I therefore agree with the district court’s conclusion that Peru is not an
adequate alternative forum.11
10
Although the majority suggests that Monegasque held otherwise, I question
whether the issue was presented to the Monegasque court in this form. Our opinion
discusses and rejects two specific objections to the Ukraine’s adequacy as an alternative
forum: “the general corruption in the body politic of that nation,” 311 F.3d at 499, and the
“contention that a Ukrainian forum [was] not an adequate forum simply because a state-
owned enterprise of Ukraine [was] involved” in the litigation, id. There is no indication
at all that Monegasque made the argument that Figueiredo does here – that the inability of
courts other than our own to attach specific assets held in the United States renders any
alternative forum inadequate. Indeed, as noted above, note 4, the Monegasque court’s
assertions that Monegasque’s motivation for choosing a U.S. forum was “not apparent”
and that its only connection to the United States was “the jurisdiction provided by the
[New York] Convention,” id., strongly suggest that this argument was not presented.
11
The majority’s position seems to suggest that only Peru is an appropriate forum,
since only in Peru is it certain that the three-percent cap will be applied. But, of course,
the only issue in a forum non conveniens determination is whether this forum is
inappropriate. Nothing in the Court’s judgment prevents Figueiredo from seeking
enforcement of its award in another state that is a signatory to the Panama or New York
Convention in which Peru has sufficient assets to satisfy the judgment. Such a
jurisdiction, if one exists, may not recognize the doctrine of forum non conveniens at all,
or may find application of such a doctrine inconsistent with the Conventions. It may well
be, therefore, that Figueiredo has a number of alternative fora that may, in a certain sense,
be adequate fora in which to achieve its goal.
Moreover, the majority opinion does not address whether Figueiredo could reduce
its arbitration award to a judicial judgment in the courts of another signatory country and
25
In any event, the existence of an adequate alternative forum, like the degree of
deference accorded to the plaintiff’s choice of forum, is simply a preliminary inquiry.
Even assuming arguendo that the plaintiff’s choice of forum is entitled to little deference,
and that there is an adequate alternative forum in which execution could be sought, to
achieve a forum non conveniens dismissal a defendant must still show that the balance of
the private and public convenience factors tips “strongly” in favor of the alternative
forum. PT United Can Co. v. Crown Cork & Seal Co., 138 F.3d 65, 74 (2d Cir. 1998)
(emphasis added). Although Peru argues strenuously that proof issues surrounding
Figueiredo’s claim of non-signer liability constitute a private convenience factor
weighing in favor of dismissal, as noted above, I do not understand the majority to offer
any credence to this argument.
Rather, the majority’s holding is premised on the view that Peru’s desire to enforce
the three-percent limit on judgments against the state is a “public interest factor” that
then return to the United States to attach Peruvian assets. Since the Conventions equate
the enforcement of international arbitral awards with the enforcement of foreign judicial
judgments, see Panama Convention art. 4 (“An arbitral decision or award that is not
appealable under the applicable law or procedural rules shall have the force of a final
judicial judgment.”), the majority’s analysis would seem to suggest that American courts
would find it equally “inconvenient” for a party to seek enforcement of a foreign judicial
judgment against the U.S. assets of a foreign government entity wherever the foreign
state’s laws would limit the equivalent remedy in the courts of that country. I find it
difficult to believe, however that this Court would countenance – let alone require – the
dismissal of an action to enforce a foreign court’s judgment against a judgment debtor’s
U.S. assets on the ground that it would be more “convenient” for the judgment creditor to
bring an action in a foreign court because the judgment debtor is a state agency that
would be more able to limit enforcement there under domestic law.
26
bears on the forum non conveniens analysis. The Court cites no authority for this
position, because there is none. Indeed, the law tilts decidedly the other way. Consider
what the Supreme Court has said about the relevant public factors bearing on a forum non
conveniens decision:
Factors of public interest also have place in applying
the doctrine. Administrative difficulties follow for courts
when litigation is piled up in congested centers instead of
being handled at its origin. Jury duty is a burden that ought
not to be imposed upon the people of a community which has
no relation to the litigation. In cases which touch the affairs
of many persons, there is reason for holding the trial in their
view and reach rather than in remote parts of the country
where they can learn of it by report only. There is a local
interest in having localized controversies decided at home.
There is an appropriateness, too, in having the trial of a
diversity case in a forum that is at home with the state law
that must govern the case, rather than having a court in some
other forum untangle problems in conflict of laws, and in law
foreign to itself.
Gulf Oil, at 330 U.S. at 508-09.
Some of the cited factors favor enforcement of this award in Peru, albeit weakly.
Certainly, however, they do not – either individually or collectively – tilt strongly enough
in favor of a Peruvian forum to overcome the preference for the plaintiff’s choice of
forum. As noted above, the U.S. courts are congested, but the disposition of this
essentially summary proceeding would not be complicated, the case presents no serious
choice-of-law issue, the persons whose affairs it touches are all parties to the litigation,
and no jury trial would be required. Unquestionably, there is a “local interest in having
27
localized controversies decided at home,” but that is considerably counterbalanced by the
fact that this is an international dispute in which the parties consciously consented to
litigate in a private arbitration, with the resulting award subject to enforcement in the
courts of any state signatory to the Panama Convention.
But however these factors cut, none of them is remotely analogous to Peru’s
interest in enforcing its three-percent limitation. The public factors cited by the Supreme
Court, like the private interest factors, relate to the balance of conveniences – that is, to
neutral reasons why it makes sense to hold a judicial proceeding in one country rather
than another. The majority correctly appreciates that the plaintiff’s desire to obtain a
larger recovery is not a reason to reject application of forum non conveniens. Why then
should the defendants’ desire to avoid payment by forcing the case into a forum in which
the plaintiff’s recovery will be smaller be a reason to embrace it? The hopes of one party
to the litigation that it will more easily prevail in the litigation are not transformed into
“public factors” simply because that party is a sovereign state.
I recognize that there is something appealing about the argument that Figueiredo
should not be able to levy on Peruvian assets in the United States to enforce a large
judgment, and thereby escape Peruvian judgment-enforcement limitations designed to
protect the budget of a developing country. But that concern is not one that sounds in the
interests assessed by a forum non conveniens ruling. In other contexts, such policy
considerations might figure in a choice-of-law analysis: Is Peru’s interest in the
28
controversy so great that we must respect the three-percent limitation as one that
somehow is implicitly incorporated within the arbitration award? Peru, however, has not
argued that its rule should be applied here as a matter of choice of law, and it candidly
admitted at oral argument, and in its supplemental post-argument briefing to the Court,
that it did not do so because it expected that under ordinary choice-of-law principles the
enforcement of the award would be governed by U.S. law. The majority does not
challenge that view, and I have no reason to doubt it. The Conventions seek to analogize
international arbitration awards to foreign judicial judgments, and it is well established
that forum law governs foreign judgment enforcement. See Restatement (Second) of
Conflict of Laws § 99 (1969) (“The local law of the forum determines the methods by
which a judgment of another state is enforced.”); Competex, S.A. v. Labow, 783 F.2d
333, 341 (2d Cir. 1986) (applying New York law to determine whether a judgment
obtained in England but enforced in New York has been satisfied); cf. Baker ex rel.
Thomas v. Gen. Motors Corp., 522 U.S. 222, 235 (1998) (“Enforcement measures do not
travel with the sister state judgment as preclusive effects do; such measures remain
subject to the evenhanded control of forum law.”).
If anything, the majority’s underlying policy argument presents the issue of
whether abstention is required in the interest of international comity. Yet the State
Department tells us that Peru’s failure to identify a “true conflict” between its judgment
cap and U.S. law governing the enforcement of arbitral awards takes comity
29
considerations off the table, see Hartford Fire Ins. Co. v. California, 509 U.S. 764, 798-99
(1993), and I do not read the majority to disagree. Moreover, to the extent that the public
factors do embrace state-level policy concerns, the government makes a compelling case
that the interest of the United States in satisfying its obligations under the Panama
Convention is at least as great as any interest Peru might have in imposing its limit on the
payment of arbitral awards. As the government’s brief points out, the United States has a
longstanding commitment to promoting international commercial arbitration, as
evidenced by the Federal Arbitration Act and Congress’s ratification of both the New
York and Panama Conventions. That commitment requires our courts to recognize and
enforce international arbitral awards in the vast majority of cases.
The majority disregards all of these arguments and, notwithstanding its candid
admission that it does not understand precisely how the Peruvian judgment cap operates,
see Majority Op., ante at [4 n.3], concludes that the plaintiff’s award must be subject to it.
Of course, given that we lack power to transfer the case to Peru or to insist that the award
be enforced there, the plaintiff remains free to seek enforcement in any of the other
countries that are party to the Panama Convention, some of which would no doubt see the
cap as no obstacle to recovery. My concern is therefore less with the implications of the
majority’s holding for this particular plaintiff than with how this decision will distort the
law of forum non conveniens in this Circuit and undercut the transnational effort (in
which the United States is an active participant) to promote commercial arbitration.
30
Because I believe that the majority’s decision adopts an incorrect, expansive, and
unprecedented approach to forum non conveniens precisely in a context in which we
should be particularly cautious and restrained in its application, I respectfully dissent.
31