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BANCO METROPOLITANO, S.A. v. DESARROLLO DE AUTOPIS

July 10, 1985

BANCO METROPOLITANO, S.A., Plaintiff, against DESARROLLO DE AUTOPISTAS Y CARRETERAS DE GUATEMALA, SOCIEDAD ANONIMA, through JUNTA INTERVENTORA OF DAG; and BANCO DE GUATEMALA, Defendants


The opinion of the court was delivered by: SWEET

SWEET, D.J.

Defendants Desarrollo de Autopistas y Carreteras de Guatemala, Sociedad Anonima ("DAG") through Junta Interventora of DAG ("Intervention Commission") and Banco de Guatemala ("Banco de Guatemala") have moved under Fed.R.Civ.P. 12 to dismiss the complaint of plaintiff Banco Metropolitano, S.A. ("Banco Metropolitano") for lack of in personam jurisdiction and on the grounds of forum non conveniens. Banco Metropolitano seeks to recover on two promissory notes issued by DAG and guaranteed by Banco Guatemala. The defendants' motion to dismiss on the basis of forum non conveniens is granted for the reasons set forth below.

This action was initiated by Banco Metropolitano, a Guatemalan bank, in the Supreme Court of the State of New York, seeking recovery on the promissory notes in the respective amounts of $850,000 and $1,000,000 issued formally on February 19, 1981 by DAG to Estorial Associated, Inc. and Devco Development Co., Inc., respectively, in New York, payable February 19, 1982. Both notes were guaranteed by Banco de Guatemala, the central bank and monetary authority of the Republic of Guatemala. Banco Metropolitano alleges that it is the present holder of the notes, assigned for good and valuable consideration and that on the due date it became entitled to the amount with interest as provided in the notes at 18% from the due date.

 The note state, as translated:

 
Desarrollo de Autopistas y Carreteras de Guatemala, Sociedad Anonima, the Government of the Republic of Guatemala and Banco de Guatemala expressly waive any presentation, protest, notice of nonpayment or notice of refusal to pay this Promissory Note. they (sic) also waive any right of immunity from suit; and Desarrollo de Autopistas y Carreteras, Sociedad Anonima and Banco de Guatemala waive any right to be tried by their own courts and subject themselves to the jurisdiction of the Courts of the State of New York, United States of America.

 On April 26, 1982 the Republic of Guatemala by Decree 23-82 revoked the concession agreement under which DAG was operating, finding it to be "detrimental to the Nation's sovereignty and the country's best interests . . ." and finding that "appropriate steps must also be taken in order to prevent deterioration of the balance of payments, preserve public finances and protect the country's economic in general." The Republic also placed DAG under the control of an Intervention Commission, and on March 14, 1983 the Intervention Commission was authorized to take steps to recover all DAG assets, including all sums unspent. The following year a Claims Procedure was established for DAG creditors.

 On February 7, 1983 Banco Metropolitano was advised that certain notes issued by DAG had been "immobilized." The Bank challenged this procedure as to three DAG notes, and its effort to nullify the "immobilization" was denied. The denial was upheld on appeal, and the Bank was fined for seeking to enjoin the "immobilization." These events followed the disclosure of the allegedly fraudulent activities of DAG which produced obligations of $50 million dollars but no highways and resulted in the August 1983 conviction of its former president.

 On February 18, 1985 the General Manager of the Banco Metropolitano accompanied by its president and another person delivered a copy of the summons and complaint to a member of the Intervention Commission and to the Manager of the Banco Guatemala. The summons and complaint were in English, and it has been stated without contradiction that February 18, 1985 was one day before the expiration of the relevant statute of limitations under Guatemalan law. However, no proof has been adduced on the applicability or term of the Guatemalan statute of limitations and for the purposes of the pending motion it remains an unresolved issue, though the allegation is certainly relevant.

 According to Banco Metropolitano, the summons and complaint were accepted at the Banco de Guatemala. The Banco de Guatemala's Legal Counsellor advised the Banco Metropolitano officers that under an agreement between the governments of Guatemala and the United States notice of process had to be served on the Consulate of the Republic of Guatemala in New York. This was done the following day. The Legal Counsellor has denied rendering this advice. No further service was undertaken, nor has any authority been cited under which the consulate in New York can accept service for Banco de Guatemala.

 The affidavits and memoranda submitted in support and in opposition have resolved at least two issues: the role of the Intervention Commission in this litigation and the status of DAG and Banco de Guatemala. DAG was named "through" the Intervention Commission and the Banco Metropolitano does not now maintain that the Commission itself is a party. There is also no contest contest concerning the status of Banco de Guatemala and the Intervention Commission as "foreign states" as defined by the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. § 1602 et seq ("FSIA"). What is at issue initially is the adequacy under the FSIA of the service described above and, in the event that the service was not adequate, the ability of Banco Metropolitano to cure the inadequacy, nunc pro tunc. The resolution of those issues as set forth below also require consideration of the forum non conveniens contentions of the defendants.

 Service of process on an agency or instrumentality of a foreign state, such as the Banco de Guatemala, must be made pursuant to § 1608(b) of the FSIA which provides:

 
(b) Service in the courts of the United States and of the States shall be made upon an agency or instrumentality of a foreign state:
 
(1) by delivery of a copy of the summons and complaint in accordance with any special arrangement for service between the plaintiff and the agency or instrumentality; or
 
(2) if no special arrangement exists, by delivery of a copy of the summons and complaint either to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process in the United States; or in accordance with an ...

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