Forum Non Conveniens Dismissal of Suit

Forum Non Conveniens Dismissal of Suit to Enforce Arbitral Award in 2011

United States views on international law (based on the document “Digest of U.S. Practice in International Law”): As discussed in information on Privileges and Immunities in this legal Encyclopedia.A.2.c., in February 2011, the United States submitted an amicus brief in the U.S. Court of Appeals for the Second Circuit after the district court's denial of a motion to dismiss a case against the Republic of Peru and one of its ministries. Figueiredo v. Peru, No. 10-0214(CON) (2d. Cir. 2011). In addition to the section on the Foreign Sovereign Immunities Act (FSIA) discussed in information on Privileges and Immunities in this legal Encyclopedia, the U.S. brief also contained a section arguing that the district court had properly denied the motion to dismiss on forum non conveniens grounds. Excerpts from the discussion on forum non conveniens follow (with footnotes and citations to the record omitted). The brief is available in full at (internet link) state.gov/s/l/c8183.htm. On December 14, 2011, the U.S. Court of Appeals for the Second Circuit decided the appeal, reversing the district court's denial of the motion to dismiss on forum non conveniens grounds. Figueiredo v. Peru, 665 F.3d 384 (2d Cir. 2011).

Developments

The district court correctly held that forum non conveniens is an available ground for dismissal in proceedings brought pursuant to the Panama Convention.…

Article 4 of the Panama Convention provides that “execution and enforcement” under the Convention should occur “in accordance with the procedural laws of the country where it is to be executed.” Panama Convention Art 4. As the Supreme Court has explained, the doctrine of forum non conveniens is among the “procedural laws” of general applicability in the United States. American Dredging Co. v. Miller, 510 U.S. 443, 453 (1994) (forum non conveniens is “procedural rather than substantive”). Forum non conveniens is therefore properly considered pursuant to Article 4 of the Convention.

Under the governing standard, in considering whether dismissal on forum non conveniens grounds is appropriate, “a court determines the degree of deference properly accorded the plaintiff 's choice of forum” and “whether the alternative forum proposed by the defendants is adequate to adjudicate the parties' dispute,” and then “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). In the United States' view, the determinative consideration in this case, and one that implicates U.S. policy interests, is the balancing of the public and private interest factors. Even assuming the availability of another adequate forum and that Figueiredo's choice of forum should get little if any weight, the public policy interest in favor of enforcing arbitral awards under the Panama Convention weighs heavily against dismissal here.

Details

B. Public Interest Factors The United States has a significant interest in allowing U.S. courts to enforce international arbitration awards pursuant to the Panama Convention, as the district court recognized. Accordingly, the public interest factors will generally weigh against forum non conveniens dismissal and the doctrine should only be employed to dismiss an action if compelling countervailing interests are present. In recommending ratification of the Panama Convention, the Deputy Secretary of State observed that “[a]rbitration agreements have become an increasingly prevalent feature of international commercial transactions, as parties have sought the advantages of efficiency and flexibility which arbitration can provide.” S. Treaty Doc. No. 97-12, at 3 (1981). The State Department also determined that “[t]he recognition and enforcement of international arbitration agreements and awards by national courts, as provided for in this Convention, is necessary to support this development.” Id.; see Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985) (noting that the New York Convention evinces a “strong belief in the efficacy of arbitral procedures for the resolution of international commercial disputes”).

If on remand the district court here finds that there is subject matter jurisdiction over Figueiredo's claims against Peru and the Ministry, the presence of Peru's assets in New York provides strong support for the district court's decision not to grant dismissal under the doctrine of forum non conveniens. A purpose of the Panama Convention was not only to permit “recognition” of foreign arbitration awards, but also to facilitate “execution” of such awards “in the same manner as that of decisions handed down by national or foreign ordinary courts.” Panama Convention, Art. 4. Congress implemented this provision by directing that foreign arbitration awards “shall . . . be recognized and enforced under” the Federal Arbitration Act. 9 U.S.C. § 304 (emphasis added); cf. 28 U.S.C. § 1606 (where an exception to foreign sovereign immunity exists, a foreign state “shall be liable in the same manner and to the same extent as a private individual under like circumstances”). Congress's evident intent was thus to permit those with foreign arbitration awards to enforce those awards against assets that may be within the jurisdiction of United States courts. Indeed, the very point of registering and enforcing an arbitration award in a foreign forum is to satisfy the award with the debtor's assets located in the forum.

On the other hand, this Court has held that considerations of international comity are relevant to the weighing of public interest factors in forum non conveniens analysis. Blanco v. Banco Industrial de Venezuala, S.A., 997 F.2d 974, 983 (2d Cir. 1993). Accordingly, another relevant public interest factor may therefore be the Peruvian three-percent cap law, which Peru argues provides an independent basis to dismiss this action. In this case, however, considerations of international comity should not carry much weight in the forum non conveniens balancing because, as described in more detail below, Peru's comity argument is undermined by the lack of demonstrated direct conflict between Peruvian law and these confirmation and enforcement proceedings.* Other relevant public interest factors include “administrative difficulties associated with court congestion; the imposition of jury duty upon those whose community bears no relationship to the litigation; the local interest in resolving local disputes; and the problems implicated in the application of foreign law.” Monde Re, 311 F.3d at 500 (citing Gilbert, 330 U.S. at 508-09). These factors do not weigh strongly against adjudication in this case. The district court did not raise any concerns of court congestion, and FSIA litigation is conducted without a jury. 28 U.S.C. § 1330(a). Any interest Peru had in adjudicating this matter in Peru is outweighed by the United States' interest in enforcing arbitration awards and the presence of Peruvian assets in New York. And while the district court may have to consider some aspects of Peruvian law in determining the Program's status, that is not uncommon in FSIA litigation. Moreover, U.S. law, not Peruvian law, controls whether to enforce the arbitration agreement.

More about the Issue

C. Private Interest Factors The “private interest” factors that a court should consider in a forum non conveniens analysis include “relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses . . . and all other practical problems that make a trial of a case easy, expeditious and inexpensive.” Monde Re, 311 F.3d at 500.

The record in this case already contains evidence from Peru's expert concerning the Program's status. Although, as described above, the district court's assessment of subject matter jurisdiction may require additional evidence and fact finding, the challenges faced by the parties in presenting such evidence do not generally weigh in favor of dismissal on forum non conveniens grounds. U.S. courts have routinely considered the same jurisdictional question presented here, i.e., whether governmental entities are agencies or instrumentalities of a foreign state, based on evidence submitted by the parties. See, e.g., Garb, 440 F.3d at 591; Noga, 361 F.3d at 684-90. Where “extensive discovery” and a probable “trial of the factual issues implicating and establishing” the liability of a nonsigner to an arbitration agreement are necessary, the private interest factors may be substantial. Monde Re, 311 F.3d at 500. But even then, those considerations would have to be weighed against the strong public interest in enforcing international arbitration agreements under an applicable treaty, especially where the debtor has assets in the forum in which registration and enforcement is sought.

In this case, there is no indication that the burden on the parties to present evidence regarding the legal relationship between the Program and Peru and the Ministry will be so extensive as to conclude that the district court abused its discretion in denying forum non conveniens dismissal.

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See Also

• Private International Law
• International Civil Litigation
• Arbitral Awards

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Notes and References

1. * Editor's note: See discussion in Section B.4. infra of the portion of the United States brief addressing comity.