Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

PEPSICO INC. v. OFICINA CENT. DE ASESORIA Y AYUDA

October 28, 1996

PEPSICO INC. and PEPSI-COLA PANAMERICANA, S.A., Petitioners,
v.
OFICINA CENTRAL DE ASESORIA Y AYUDA TECNICA, C.A., C.A. EMBOTELLADORA ANTIMANO, EMBOTELLADORA ARAGUA, S.A., EMBOTELLADORA BARINAS, S.A., EMBOTELLADORA CARABOBO, S.A., C.A. EMBOTELLADORA CARACAS, EMBOTELLADORA CARONI, S.A., C.A. EMBOTELLADORA CORO, GASEOSAS ORIENTALES, S.A., EMBOTELLADORA GUARICO, S.A., EMBOTELLADORA GUAYANA, S.A., HIT DE VENEZUELA, S.A., EMBOTELLADORA LA PERLA, S.A., C.A. EMBOTELLADORA LARA, EMBOTELLADORA MATURIN, S.A., C.A. EMBOTELLADORA NACIONAL, EMBOTELLADORA ORINOCO, S.A., C.A. EMBOTELLADORA TACHIRA, C.A. EMBOTELLADORA VALERA, Respondents.



The opinion of the court was delivered by: RAKOFF

 JED S. RAKOFF, U.S.D.J.

 By order to show cause, petitioners move for immediate determination of a Petition filed October 16, 1996 that seeks to compel arbitration of respondents' contractual disputes with petitioners and to enjoin respondents from further litigating those disputes in the courts of Venezuela. Respondents, in turn, ask the Court to decline jurisdiction as a matter of international comity. After full consideration of the parties' written submissions and oral arguments, the Court denies the motion for immediate relief but retains jurisdiction of the underlying Petition, subject to a 60-day stay of proceedings to allow the Venezuelan court to determine, if it chooses, a threshold question of Venezuelan law.

 The essential facts may be stated briefly. Petitioner PepsiCo Inc., a North Carolina corporation with its principal place of business in Purchase, New York, wholly owns co-petitioner Pepsi-Cola Panamericana, S.A., a Venezuelan corporation with general offices in Caracas, Venezuela. Respondent Oficina Central De Asesoria y Ayuda Tecnica, C.A.("OCCAT") is a Venezuelan corporation that represents, manages and controls the co-respondent bottling companies (the "Cisneros bottling companies"), which are Venezuelan companies owned by Diego Cisneros, a Venezuelan citizen. As of January 1, 1988, petitioners, by written contract, granted each Cisneros bottling company the exclusive right to bottle Pepsi-Cola in its respective area of Venezuela for a term of 15 years.

 Paragraph 23 of each bottling contract provides that any party prematurely terminating the contract must pay specified liquidated damages to the other party. Paragraph 30 of each contract states in pertinent part that: "This Agreement shall be governed by the laws of the Republic of Venezuela. Any controversy or claim arising out of or relating to this contract, or the breach thereof, . . . shall be finally settled by arbitration in accordance with the rules of conciliation and arbitration of the International Chamber of Commerce. . . . The arbitration, including the rendering of an award, shall take place in New York, New York, United States of America. . . . The arbitrators shall apply the substantive law of the State of New York, United States of America . . ."

 Respondents expressly concede this Court's subject matter jurisdiction and power to compel arbitration in this case. *fn1" They nonetheless urge the Court to decline jurisdiction in favor of the Venezuelan court. In this regard, Article II.3 of the United Nations Convention On The Recognition And Enforcement Of Foreign Arbitral Awards, to which both the United States and Venezuela are signatories, provides that "The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement [to arbitrate] . . . shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed." *fn2" As noted, respondents, in their papers previously filed in the Venezuelan court, contend that the arbitration agreement set forth in paragraph 30 of the bottling contracts is either entirely "inoperative" or else "not applicable" to a dispute over the calculation of liquidated damages. Whether or not this is so is plainly a matter of Venezuelan law, for paragraph 30 flatly states that the contracts are governed by the laws of Venezuela. *fn3"

 While the Court is not blind to the facially flimsy aspect of the objections to arbitrability raised in the papers respondents have filed in the Venezuelan court, respondents have submitted some authority to support their contention that the objections have arguable merit. See Iberian Tankers Co. v. Terminales Maracaibo, C.A., 322 F. Supp. 73, 75 (S.D.N.Y. 1971). In any event, in the absence of any challenge to the adequacy of the Venezuelan legal process (see Tr., 10/21/96, at 26-27; see also Blanco v. Banco Industrial de Venezuela, S.A., 997 F.2d 974, 981 (2d Cir. 1993)) the Venezuelan court that already has the issue of arbitrability before it ought to be afforded the initial opportunity to determine this threshold question of Venezuelan law before a non-Venezuelan court is called upon to do so. *fn4"

 Accordingly, the motion for immediate determination of the Petition is denied. At the same time, this Court is mindful not only of the strong policy favoring prompt arbitration expressed in the U.N. Convention, but also of the many facial indications that respondents are utilizing dubious strategems to try to evade their plain contractual obligations. A thimblerig is still a scam even if the thimbles be courts of separate sovereigns. To entirely eschew oversight of this controversy in such circumstances would be a derogation of duty and an invitation to fraud. See Caspian Investments, Ltd. v. Vicom Holdings, Ltd., 770 F. Supp. 880, 887 (S.D.N.Y. 1991). Accordingly, notwithstanding the pendency of the Venezuelan action, this Court will retain jurisdiction of the underlying Petition in this case, see China Trade and Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33, 36 (2d Cir. 1987), but stay further proceedings for a period of 60 days (i.e., through December 27, 1996), see Borden, Inc. v. Meiji Milk Prod. Co., Ltd., 919 F.2d 822, 829 (2d Cir. 1990), in order to afford the Venezuelan court the opportunity to determine, if it chooses, the threshold question of arbitrability under Venezuelan law.

 SO ORDERED.

 JED S. RAKOFF, U.S.D.J.

 Dated: White Plains, ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.