there is an adequate alternate forum for the dispute, Blanco v.
Banco Industrial de Venezuela, S.A., 997 F.2d 974, 981
(2d Cir. 1993), and (2) balancing the public and private interest factors
the Supreme Court described in Gilbert, 330 U.S. at 508-09.
The overriding question is "whether the convenience of the parties and the
ends of justice would best be served by dismissing the action." Murray v.
British Broadcasting Corp., 81 F.3d 287, 292-93 (2d Cir. 1996) (quoting
Koster v. (American) Lumbermens Mut. Casualty Co., 330 U.S. 518, 527
(1947)). While the plaintiff's choice of forum is normally given
"substantial deference," Piper Aircraft, 454 U.S. at 256, a foreign
plaintiff's choice of forum is given less deference than that of a domestic
plaintiff. See id.; Murray, 81 F.3d at 290.
A. Adequate Alternative Forum
The first step of the forum non conveniens inquiry requires the Court to
determine whether Russia would be an adequate alternative forum in which to
adjudicate this dispute. A foreign forum is not inadequate merely because
its justice system differs from that of the United States. Blanco, 997 F.2d
at 982. Furthermore, comity requires that this Court abstain from adversely
judging the quality of Russia's justice system unless Parex makes a showing
of inadequate procedural safeguards. See PT United, 138 F.3d at 73; Blanco,
997 F.2d at 982 ("[I]t is not the business of our courts to assume the
responsibility for supervising the integrity of the judicial system of
another sovereign nation.") (citation omitted). Absent such a showing, it
is "rare" that courts find that an alternative forum to be inadequate. Piper
Aircraft, 454 U.S. at 254 n. 22; PT United, 138 F.3d at 73; Blanco, 997
F.2d at 981.
Russia is an adequate alternative forum if (1) Sberbank is subject to
service of process there, and (2) the forum permits a satisfactory remedy.
See Piper Aircraft, 454 U.S. at 254 n. 22; Alfadda, 159 F.3d at 45. Both
parties agree that Sberbank is subject to service of process in Russia and
that the Moscow City Arbitration Court has jurisdiction over this case.
(See Parex Mem. at 7-8; Sberbank Mem. at 7.)
The question thus becomes whether the Moscow City Arbitration Court
permits a satisfactory remedy. A foreign forum is not inadequate despite
employing different procedures, see, e.g., Lockman Found. v. Evangelical
Alliance Mission, 930 F.2d 764, 768 (9th Cir. 1991), or due to general
allegations of judicial corruption, see, e.g., Blanco, 997 F.2d at 981-82.
And, while an alternate forum's less favorable substantive law should
ordinarily not weigh heavily against dismissal, this factor increases in
significance when "the remedy provided by the alternative forum is so
clearly inadequate or unsatisfactory that it is no remedy at all." Piper
Aircraft, 454 U.S. at 254. This high standard is met in cases where, for
example, the foreign forum "does not permit litigation of the subject matter
of the dispute," id., 454 U.S. at 254 n. 22, or "would deny [the plaintiff]
access to its judicial system on the claims in his complaint," El-Fadl v.
Central Bank of Jordan, 75 F.3d 668, 678 (D.C. Cir. 1996), or if the
decision to dismiss "would render a plaintiff unable to pursue his or her
action elsewhere," Bhatnagar v. Surrendra Overseas Ltd., 52 F.3d 1220, 1225
(3d Cir. 1995).
Parex contends that it cannot get a satisfactory remedy in Russia for
three primary reasons: (1) Russian courts do not provide sufficient
procedural safeguards to ensure a fair trial; (2) the Russian courts will
be biased against Parex, a Latvian entity, due to the tumultuous political
climate between the two now-independent nations, and (3) Russian courts do
not recognize the validity of the NDF exchange contract between banking
institutions. As the moving party, Sberbank bears the burden of proving that
will provide an adequate forum. See Schertenlieb v. Traum,
589 F.2d 1156, 1160 (2d Cir. 1978).
1. Russian Courts' Procedural Safeguards
Sberbank has introduced a declaration from the Dean of the Moscow State
University Law School, Yevgeny A. Sukhanov, who took part in drafting the
emerging Civil Code of Russia and has authored over 300 published works in
the area of Russian law. Sukhanov Decl. at 2. Sukhanov's description of the
Russian constitution and laws is uncontested by Parex and will be accepted
as true. The Russian civil law system is characteristic of European
continental law in general, and is modeled on German law in particular.
Institutional fairness of the Russian justice system is ensured by a
constitutionally mandated independent judiciary and numerous procedural
protections under the main federal law governing property relations, the
Civil Code. In civil cases, these safeguards include, inter alia, the
presumption of equality of parties, adversarial presentation of oral and
written evidence, lifetime tenure for judges, and appellate review.
The Code of Arbitration Procedure of the Russian Federation of 1995
("CAP") expressly provides that foreign organizations have the right to
seek enforcement of their violated or disputed rights in the Russian
arbitration courts and shall enjoy the same procedural rights as Russian
organizations. CAP Art. 210 §§ 1, 2. The CAP provides that arbitration
courts may apply any applicable law, including domestic law, international
treaties, or the laws of other countries. Arbitration courts have the
power to adjudicate the breach of contract claims, to order reimbursement,
damages, and penalties.
Rather than contesting the validity of the laws Sukhanov describes, Parex
suggests that Sukhanov himself is biased (as "a Russian with state ties"),
and instead offers evidence that the Russian judicial system does not in
reality function in the manner its laws provide. First, Parex's "expert,"
Stanislaw Pomorski, a Polish-born law professor at Rutgers University,
the reality of the administration of justice by the Russian arbitrazh
[arbitration] courts departs radically from the procedural guarantees of
litigants rights as written. The procedures consist largely of secret
trials at which no witness testimony is permitted and no reliable record
maintained. Judges often lack genuine independence and enforcement of
judgments ranges from difficult to impossible.
(Pomorski Decl. at 2.) Pomorski alleges, inter alia, that in practice, oral
testimony is prohibited, reliable recordkeeping is nonexistent, dockets are
overburdened, Russian judges are subject to bias in favor of the state due
to underfunding and political pressure, and Russian judges are not
knowledgeable about complex commercial litigation. (Id. at 3-10.) In sum,
while implicitly conceding that Russian law as codified provides adequate
procedural guarantees, Pomorski contends that the "`law in action'
radically differs from the `law in books.'" (Id. at 3, 4-8.)
It is unclear whether Pomorski's knowledge of the actual workings of the
Russian judicial system derives from anywhere other than the law review
articles he cites. Parex has introduced no evidence to suggest that
Pomorski has any independent expertise in this area. Furthermore, Professor
Sukhanov, who practices and teaches law in Russia, convincingly outlines
the shortcomings of the articles on which Pomorski relies: one was written
by a recent graduate of a Russian law school with no practical work
experience in Russian courts; the author of a second cited article sent
written apologies to Russian legal experts (including Sukhanov) after he
unsuccessfully sought to advise in the drafting process of the new laws;
and the conclusions of a third author are simply not substantiated. (See
Sukhanov Decl. at 4-7). Furthermore, Sukhanov demonstrates that oral
argument is in fact heard on a regular basis in civil claims.
Even if Russia employs different procedures than the United States
courts, Sberbank has met its burden of proving that Russia's judicial
system affords adequate procedural protections upon the face of its
statutory provisions. See, e.g., PT United, 138 F.3d at 74 (holding that
district court properly dismissed case on forum non conveniens grounds
because Indonesia, although not providing identical procedures, was an
adequate alternate forum); ACLI Intern. Commodity Serv., Inc. v. Banque
Populaire Suisse, 652 F. Supp. 1289, 1295-96 (S.D.N.Y. 1987) (procedures
in foreign forum need not be identical to those in United States to be
adequate, so long as they are not "wholly devoid of due process")
(citation and internal quotations omitted). Parex has failed to establish
conclusively that the current practice fails to comply with the procedural
provisions of Russian law.
2. Alleged Bias Against Latvian Litigants
Parex next suggests that due the politically tumultuous past and current
relationship between the newly independent nations of Latvia and Russia,
Russian courts discriminate against Latvian litigants. In particular, Parex
cites a proposed resolution introduced in the Russian legislature, the Duma,
which provides in relevant part that:
[a]ny claims, legal and arbitration actions in rem filed
by the Government of the Latvian Republic or . . . or other
[Latvian] organizations . . . in connection with failure to
conduct . . . any foreign trade or other international
economic transactions . . . as well as in connection with
failure to conduct . . . any transaction due to suspension
of activities or enterprises and organizations [doing
business with Latvian organizations] . . . shall not be
(Pomorski Decl. Ex. E, Draft Proposal of Russian Federal Law, "On Measures
Adopted by Russian Federation to Prevent Violation of Basic Rights and
Liberties of Citizens of Russian Federation and Russian Nationals in
Latvian Republic," (no date provided).)