The opinion of the court was delivered by: Sweet, District Judge.
Plaintiff Parex Bank ("Parex") has moved, pursuant to
28 U.S.C. § 1447(c), to remand this action to New York State Supreme Court,
New York County. For the reasons set forth below, the motion is
Background and Prior Proceedings
On July 21, 1999, Parex, a Latvian bank which does business in
New York, filed this action in New York Supreme Court against
Russian Savings Bank a/k/a Savings Bank of the Russian Federation
a/k/a Russian Federation Savings Bank a/k/a Commercial Savings
Bank of the Russian Federation a/k/a Sberbank ("Sberbank"), a
Russian bank which also does business in New York. Parex alleges
that Sberbank failed to perform on a non-deliverable forward
exchange contract purportedly entered into by Parex and Sberbank.
On July 22, 1999, Justice Charles E. Ramos of the New York
Supreme Court issued an order requiring Sberbank to show cause
why an order of attachment should not be issued permitting a levy
on Sberbank's account at the Bank of New York for assets totaling
$3,755,642.01, as well as to show cause why a preliminary
injunction should not be issued restraining Sberbank from
selling, transferring, or assigning such assets. The order also
temporarily restrained Sberbank from selling, transferring, or
assigning those assets. Parex, as required, posted a bond of
$750,000 on July 27, 1999, and served Sberbank with the summons
and complaint and the order to show cause.
On August 9, Sberbank filed a notice of removal to remove the
action to this Court, on the grounds of federal subject matter
jurisdiction pursuant to 28 U.S.C. § 1330(a) & 1441(d).
The instant motion to remand was filed on September 10, 1999.
Oral argument on the motion was heard on October 13, 1999, at
which time the motion was deemed fully submitted.
Section 1441(d) of Title 28 provides:
Any civil action brought in a State court against a
foreign state as defined in § 1603(a) of this title
may be removed by the foreign state to the district
court of the United States for the district . . .
embracing the place where such action is pending.
28 U.S.C. § 1441(d). Federal subject matter jurisdiction exists
over matters involving foreign states pursuant to
28 U.S.C. § 1330(a). Sberbank maintains that it is a foreign
state as defined in the Foreign Sovereign Immunities Act ("FSIA"),
28 U.S.C. § 1603(a), which states that a "foreign state" "includes a
political subdivision of a foreign state or an agency or
instrumentality of a foreign state as defined in subsection (b)."
28 U.S.C. § 1603(a). Under subsection (b), an "agency or
instrumentality of a foreign state" is defined as an entity:
(1) which is a separate legal person, corporate or
(2) which is an organ of a foreign state or political
subdivision thereof, or a majority of whose shares or
other ownership interest is owned by a foreign state
or political subdivision thereof, and
(3) which is neither a citizen of a State of the
United States as defined in section 1332(c) and (d)
of this title, nor created under the laws of any
28 U.S.C. § 1603(b). Parex does not dispute that Sberbank meets
prongs (1) and (3) of subsection (b). The inquiry thus hinges on
prong (2), i.e., whether (i) Sberbank is an organ of a foreign
state or political subdivision thereof; or (ii) a majority of
Sberbank's shares or other ownership interest is owned by a
foreign state or political subdivision thereof. Sberbank
maintains that it satisfies both (i) and (ii). Because ...