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June 23, 2004.


The opinion of the court was delivered by: DENISE COTE, District Judge


This action concerns a plaintiff's attempt to collect from a parent corporation a judgment entered against the parent's former subsidiary. It is undisputed that the parent corporation is a "foreign sovereign" pursuant to the Foreign Sovereign Immunities Act, 28 U.S.C. § 1610(c) ("FSIA").

  On February 10, 2004, the Allstate Insurance Company ("Allstate"), a corporation organized under the laws of the State of Illinois with its principal place of business in Northbrook, Illinois, filed a state court action against Banco Do Estado do Rio Grande do Sul, S.A. ("Banrisul"), a state-owned corporation organized under the laws of the Federal Republic of Brazil ("Brazil") with its principal place of business in the Brazilian State of Rio Grande do Sul.*fn1 Allstate sought to enforce five default judgments totaling approximately $1,100,000 obtained against one of Banrisul's former subsidiaries, União Novo Hamburgo Seguros, S.A. ("União").

  On February 23, Banrisul removed this action to federal court. Banrisul now moves to dismiss the action on the ground that this Court lacks subject matter jurisdiction. For the reasons stated below, the motion is granted.


  The following facts are taken from the pleadings and evidence submitted by both parties in connection with this motion. See Cargill Intern. S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1019 (2d Cir. 1993) (in resolving a jurisdictional dispute, court must not only review the pleadings but also evidence submitted by the parties). At all times relevant to this lawsuit, the state of Rio Grande do Sul owned approximately 99.40% of the total shares of Banrisul's stock. From September 1968 until late 1997, Banrisul owned over 88% of União's stock.

  During the period from 1976 to 1981, União was a member of Grupo de Empresas Seguradora Brasileiras ("GESB"), a pool of Brazilian insurance companies that entered into a series of reinsurance*fn2 contracts, including five such contracts with Allstate (the "GESB Contracts").*fn3 Each of the GESB Contracts contained an arbitration clause whereby the parties agreed to resolve any disputes by arbitration in Illinois. For example, the Casualty Excess Agreement provided, in relevant part:
If any dispute arises between the Reinsurer and the Retrocessionaires with reference to the interpretation, performance or breach of this Agreement . . . such dispute . . . will be submitted to three arbitrators. . . . The arbitration hearings will be held in Northbrook, Illinois.
By the GESB Contracts, União agreed to designate a United States law firm and the Illinois Superintendent of Insurance as the agents for service of process in any proceeding arising from the contracts.*fn4 Banrisul was not a party to any of the GESB Contracts.

  In 1997, as part of the financial reforms enacted by the State of Rio Grande do Sul, Banrisul held a public auction for all of its shares in União. On November 25, Bradesco Seguros, S.A. ("Bradesco"), a non-state owned Brazilian corporation, emerged as the successful bidder at the auction. The terms and conditions of the auction were published in an official document of the government of Rio Grande do Sul (the "Conditions of Sale"). Attached to the Conditions of Sale was a Share Purchase and Sale Agreement (the "Purchase Agreement") to be entered into by Banrisul and the eventual purchaser. In addition, Banrisul and União executed an "Agreement of Commitment for the Assumption of Obligations and Other Covenants" (the "Commitment").*fn5 Allstate was not a party to any of the agreements.

  The documents governing the auction of Banrisul's shares in União provided that Brazilian law would govern any disputes, and that Brazilian courts retained jurisdiction over the parties to the agreements. Specifically, the Conditions of Sale provided that disputes arising under it would be "governed by Brazilian law" and the parties would be "subject to the jurisdiction of the Courts of Porto Alegre, Rio Grande do Sul State, which are competent to hear any legal action that may arise from it." The Purchase Agreement established exclusive jurisdiction for any disputes between Banrisul and União's new owner in a particular court in Rio Grande do Sul.*fn6

  The documents also defined Banrisul's obligations with respect to União's potential liabilities as a member of GESB. The Commitment provided that Banrisul would reimburse União's purchaser for any liabilities arising from União's participation in GESB. The Commitment stated:
Should Companhia União come [sic] be required to make payments as a result of a final judicial decision, Banrisul undertakes to reimburse the entirety of the amounts paid within a period of ten (10) days commencing from the submittal of the formal document by Companhia União, under penalty of incurring a contractual penalty of ten percent (10%) of the amount paid, the interest, and the other legal charges.
The Purchase Agreement reiterated Banrisul's obligation to União's new purchaser,
[Banrisul] is expressly responsible, before the New Control Group [i.e., Bradesco] for remaining obligations assumed by [] União as [a] member of [GESB] . . . according to item 4.4 [of the Conditions of Sale].
Section 4.4 of the Conditions of Sale similarly stated Banrisul's obligation to União's new owner for the "remaining obligations assumed by União" as a member of GESB.

  On August 2, 2000, after União allegedly failed to pay the amounts it owed under the GESB Contracts, Allstate commenced five separate arbitrations against União in Illinois. União did not participate in the arbitrations, and five separate arbitration awards were entered in Allstate's favor.*fn7 On May 8, 2001, Allstate moved to confirm each award in separate proceedings in the Northern District of Illinois. União again failed to appear, and on August 30, the court entered five separate Orders and Judgments (the "Judgments") confirming the arbitration awards against União. On June 12, 2002, Allstate registered the Judgments in this District, pursuant to 28 U.S.C. § 1963.

  In a letter dated January 21, 2003, in response to Allstate's effort to collect on the Judgments, União informed Allstate that Banrisul, not União, was responsible for payment of the Judgments. União directed Allstate to the Conditions of Sale and the Purchase Agreement. On September 3, Allstate filed a petition against Banrisul in this Court seeking to enforce the União Judgments against Banrisul. On February 10, 2004, Allstate voluntarily dismissed the original federal proceeding, and on the same day commenced a new proceeding against Banrisul in state court pursuant to CPLR § 5227.*fn8 On February 23, Banrisul removed the state court petition, and now moves to dismiss Allstate's complaint for lack of subject matter jurisdiction.

  Banrisul argues that it is immune from suit in the United States because it is a "foreign state" under the FSIA. According to Banrisul, its only obligation with respect to União's participation in the GESB Contracts is to indemnify its new owner, Bradesco, for any ...

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