Defendant argues that several of three factors listed above warrant a forum non conveniens dismissal. Specifically, defendant contends that Russia is a more appropriate and convenient forum because: (1) Russian law governs this action; (2) Russia has the most direct interest in the outcome of this case; and (3) documentary evidence and several key witnesses are located in Russia.
The choice of law issue is the thorniest of the lot, so I consider it first.
A federal court sitting in diversity must apply the choice of law rules of the state in which its sits, in this case, New York. New York courts apply what has come to be called the "paramount interest" test in resolving choice of law questions in contract disputes. See Stillman v. Nickel Odeon, S.A., 608 F. Supp. 1050, 1053 (S.D.N.Y. 1985). Under this doctrine, "the law of the jurisdiction having the greatest interest in the litigation will be applied." Intercontinental Planning, Ltd. v. Daystrom, Inc., 24 N.Y.2d 372, 300 N.Y.S.2d 817, 825, 248 N.E.2d 576 (Ct.App. 1969) (citing and quoting Miller v. Miller, 22 N.Y.2d 12, 290 N.Y.S.2d 734, 237 N.E.2d 877 (Ct.App. 1968)).
Applying this standard, I hold that New York law governs the instant suit. The alleged contract in this case was between Kraft, a Delaware corporation headquartered in Illinois, and Royal, a Marshall Islands corporation headquartered in New Jersey. However, KF International, an unincorporated division of Kraft headquartered in New York, was responsible for handling the Kraft end of the deal. By Kraft's own admission, KF International was responsible for supplying Kraft-branded products to Royal's customers in Eastern Europe. It received Royal's orders from KJS; issued the requisite pro forma invoices; accepted payment from Royal; and filled the order. See Reply Declaration of Mary Beth Lonegan at PP 7-9. Presumably, KF International would have assumed these same responsibilities had there been performance of the alleged agreement. Thus, if a contract with Kraft was formed, it was formed with a New York division of that entity, and if a breach occurred, it occurred in New York.
Defendant does not claim that the law of any other state or the Marshall Islands should govern this action. Rather, in defendant's view, since plaintiff has business interests in Russia and the subject of the alleged agreement was destined for resale in Russia, that country has the most substantial interest in this suit and its law should govern. But this dispute is between Kraft and Royal, not Kraft and the Russian customers. Therefore, whatever interest Russia has in this action is secondary, not paramount.
Relative to Russia's, New York's interest in this lawsuit is substantial. As previously discussed, the primary issue in the instant action is whether a corporate entity located within New York's boundaries was bound by the actions of a foreign subsidiary. New York has an interest in having this issue considered under its own laws of agency, since the alleged principal -- KF International -- is headquartered in New York. In addition, assuming an agency arrangement existed, New York would have an interest in having the contract enforced, since New York was the focal point for performance. But, as the present record indicates, it is questionable whether an exchange of faxes can constitute a valid contract under Russian law. Thus, on this point as well, New York would seek to have its own law applied, so that Royal's contractual rights, enforceable under New York's Statute of Frauds, would be vindicated.
My finding that New York, rather than Russia, has the "paramount interest" in this litigation necessarily leads me to reject defendant's second purported basis for forum non conveniens dismissal: that Russia has the most significant stake in the outcome of the case. What is left to consider then, is whether the presence of some documentary evidence and certain witnesses in Russia would justify disturbing Royal's choice of forum. On this score, defendant states:
Clearly, Royal cannot sustain its breach of contract claim without proving the existence of the alleged contract it entered into in Russia. Proof of that contract will require the testimony of Ms. Ladorenko who resides outside the United States. Additionally, Royal cannot prove its claim of damage to its Russian coffee business without the testamentary and documentary evidence of its Russian customers.