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V. CORP LTD. v. REDI CORPORATION

October 7, 2004.

V. CORP LTD., Plaintiff,
v.
REDI CORPORATION (USA) a/k/a REDI CORPORATION of White Plains, New York, USA; a/k/a REDI CORP., Defendant.



The opinion of the court was delivered by: MICHAEL MUKASEY, Chief Judge, District

OPINION AND ORDER

This case arises on a motion by defendant Redi Corporation U.S.A. ("Redi Corp.") to vacate an ex parte Order of Attachment issued by this court on March 1, 2004. The pre-judgment attachment sought to enforce an Order of the English High Court of Justice, Queen's Bench Division ("High Court Order"), that had confirmed an arbitral award granted plaintiff V. Corp. Ltd. ("V. Corp.") by an arbitrator based in London. Under the New York Uniform Foreign Country Money-Judgments Recognition Act, located in Article 53 of the New York Civil Practice Law and Rules, New York extends judicial recognition to a "foreign country judgment which is final, conclusive and enforceable where rendered." N.Y. Civ. Prac. L. & R. 5302 (McKinney 1997) ("CPLR"). The central issue in this case is whether the underlying High Court Order on which the attachment was based qualifies as a "judgment" under the terms of CPLR Article 53. As explained below, because the High Court Order in this case was the "functional equivalent" of a foreign country money judgment, Seetransport Wiking Trader Schiffahrtsgesellschaft MBH & Co., Kommanditgesellschaft v. Navimpex Centrala Navala, 29 F.3d 79, 81 (2d Cir. 1994) ("Seetransport"), defendant's motion to vacate the Order of attachment is denied and plaintiff's motion to confirm the attachment is granted. I.

  V. Corp., a shipping company based in Liberia, contracted with Redi Corp., a New York corporation, to transport frozen poultry from the United States to Russia on the vessel Ref Star during April to June 2002. A dispute arose regarding the demurrage charges accrued by V. Corp. when its ship was held at port eight days beyond the contracted-for unloading period. In accordance with the shipping contract, V. Corp. initiated an arbitration proceeding in London to resolve the dispute. Redi Corp. declined to participate in the arbitration, citing a dispute over personal jurisdiction. The arbitrator, after hearing evidence presented by V. Corp., issued an award and costs to V. Corp. totaling $78,577.31. (Mavroghenis Affirmation, Mar. 22, 2004, Exs. 2, 4)

  V. Corp. then applied to the English High Court of Justice, Queen's Bench Division, for permission to enforce the arbitral award. The High Court, per Justice Gross, issued an Order on Jan. 22, 2004 permitting V. Corp. to enforce the arbitral award "in the same manner as a judgment or order to the same effect" and authorizing plaintiff "to enter judgment in terms of the said award." (Mavroghenis Affirmation, Feb. 25, 2004, Ex. H) The High Court Order was subject to a 22-day notice period during which Redi Corp. could object. V. Corp. served the High Court Order on the New York Secretary of State pursuant to New York Business Corporation Law § 306(b)(1) (McKinney 2003). The Secretary of State, however, had an incorrect address on file for Redi Corp., which had moved its offices from White Plains, New York to New York City. The Postal Service subsequently returned the papers as undeliverable with the notation "attempted unknown." (Lyons Reply Affirmation at 3, Ex. C) Redi Corp., thus having not received the High Court Order, did not object during the notice period.

  V. Corp. then applied to this court for an ex parte order of attachment under New York CPLR 6201(5), which authorizes the attachment of assets to satisfy a foreign country judgment under CPLR Article 53. This court issued an Order of Attachment on March 1, 2004. After V. Corp. moved to confirm the Order of Attachment, Redi Corp. moved to vacate the attachment, arguing that (i) the High Court Order did not qualify as a "judgment" because it was a mere "order" granting permission to enforce the arbitral award as a judgment, and (ii) V. Corp. did not serve the High Court Order in an appropriate manner because the Order was not "process" deliverable to the New York Secretary of State.*fn1 V. Corp. responds that the High Court Order was in fact a judgment because it was "final, conclusive and enforceable" in England and that plaintiffs appropriately served the Order on Redi Corp. through the Secretary of State. For the reasons stated below, defendant's claims are rejected.

  II.

  New York law governs actions brought in New York to enforce foreign judgments. S.C. Chimexim S.A. v. Velco Enterprises Ltd., 36 F. Supp. 2d 206, 211 (S.D.N.Y. 1999). New York Civil Practice Law and Rule 6201(5) permits pre-judgment attachment of a debtor's assets where an action has been brought for recognition of a foreign judgment under CPLR Article 53, the New York Uniform Foreign Country Money-Judgments Recognition Act. Article 53 in turn grants judicial recognition to "any judgment of a foreign state granting or denying recovery of a sum of money," subject to a few exceptions not applicable here. N.Y. CPLR 5301(b). This statutory grant of recognition is limited to foreign decrees that are "final, conclusive and enforceable where rendered even though an appeal therefrom is pending or it is subject to appeal." N.Y. CPLR 5302.

  The provision that a foreign judgment be enforceable "where rendered" requires the court to focus on the law of the foreign country where the decree was issued. Guinness PLC v. Ward, 955 F.2d 875, 888-89 (4th Cir. 1992). The parties, therefore, have each presented declarations of lawyers versed in the English Civil Procedure Rules and the English Arbitration Act of 1996. In Lynda Conroy's Declaration in Opposition to Plaintiff's Motion for Attachment ("Conroy Declaration"), defendant's London solicitor outlines the English procedure for obtaining a court judgment after publication of an arbitral award. Section 66 of the Arbitration Act of 1996 provides the statutory basis on which an arbitral award can be enforced, stating:
(1) An award made by the [arbitral] tribunal pursuant to an arbitration agreement may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect.
(2) Where leave is so given, judgment may be entered in terms of the award.
Arbitration Act, 1996, c. 23, pt. I, § 66 (Eng.).

  The practice notes accompanying section 66 state that there are "two methods" for enforcing an arbitral award: 1) by obtaining a court "order" granting leave to enforce the award "in the same manner as a judgment," or 2) by entering a formal "judgment" in terms of the award. (Conroy Decl. at 3 (quoting The White Book from Sweet and Maxwell, § 2E-232 (2002) ("Sweet & Maxwell"))) These two methods "are not alternative, but successive" — that is, a party must first obtain an order before seeking a judgment. (Id.) However, a party that has completed step one of the procedure (obtaining an order) need not proceed to step two (obtaining a judgment). Once armed with an order confirming its arbitral award, a party may proceed directly to enforcing the award "as a judgment" without any "need for a further application" to the Court. (Id.) Nevertheless, the practice notes advise, it may be advantageous for a party to obtain a formal judgment in certain cases, such as when the party seeks to secure "the recognition of the judgment in a foreign court." (Id.)

  In this case, plaintiff obtained an order of the English High Court of Justice permitting it to enforce the arbitral award "in the same manner as a Judgment or order" and authorizing it "to enter judgment in terms of the said award." (Mavroghenis Affirmation, Feb. 25, 2004, Ex. H) After obtaining the High Court Order, however, plaintiff did not obtain a formal judgment on the arbitral award from the High Court. Defendant relies on the two-step procedure outlined in the Conroy Declaration to argue that "plaintiff took only the first step in a two-step process." (Def.'s Reply Mem. of Law at 4) According to Redi Corp., the High Court Order was not itself a "judgment," but an "order" that "merely gave plaintiff a procedural basis to seek entry of a `judgment,' which is a separate and distinct document." (Dannenberg Decl. at 3-4) This distinction between an "order" and a "judgment" is consequential, defendant continues, "because CPLR Article 53 applies only to foreign judgments, and not to foreign orders." (Def.'s Mem. of Law at 7) As a result, the High Court Order would not be "a legitimate basis for a pre-judgment attachment under CPLR 6201." (Id.)

  Defendant's argument, however, elevates form over substance. It may well be that New York would refuse to recognize as a judgment in and of itself an arbitral award that had no confirming High Court Order. See Seetransport, 29 F.3d 79, 82 (2d Cir. 1994); 11 Jack B. Weinstein et al., New York Civil Practice ¶ 5301.03 (2004) (noting that Article 53 is "applicable only to recognition of foreign judgments which confirm foreign arbitral awards," not to arbitral awards alone). The High Court, however, did issue an order here, and after the expiration of the 22-day notice period during which defendant was allowed to object to enforcement of the arbitral award, the High Court Order qualified as "final, conclusive and enforceable" in the English courts. See N.Y. CPLR 5302. The High Court Order thus served as the "functional equivalent" of an English judgment. Seetransport, 29 F.3d at 81.

  New York has a "long-standing" tradition of recognizing and enforcing foreign country judgments. S.C. Chimexim S.A. v. Velco Enterprises Ltd., 36 F. Supp. 2d 206, 211 (S.D.N.Y. 1999) (citations omitted); Seetransport, 29 F.3d at 81 ("New York is `relatively generous' in recognizing foreign judgments.") (citation omitted). In Seetransport, the Second Circuit examined whether a decree by the Paris Court of Appeals that had rejected the defendant's application to annul an arbitral award "was itself an enforceable judgment" under Article 53. 29 F.3d at 81. Under French law, the Paris Court of Appeals' dismissal had conferred "exequatur" on the arbitral award, rendering the award enforceable in France. Id. The Second Circuit held that although exequatur "seem[ed] to presuppose" the existence of an executable judgment,*fn2 the arbitral award-with-exequatur was the "functional equivalent" of a French judgment granting the sums specified in the arbitral award. Id. at 81-82. The "decree accomplishing that result," therefore, was subject to recognition under New York's Article 53 as an enforceable judgment in its own right. Id. at 82.

  Several other cases have demonstrated the functional, as opposed to formalistic, approach that courts have taken when deciding which judicial acts qualify for recognition as foreign country judgments. See, e.g., Island Territory of Curacao v. Solitron Devices, Inc., 489 F.2d 1313, 1317, 1323 (2d Cir. 1973) (Curacao court's issuance of "writ of execution" on local arbitral award functioned as final judgment under Curacao law, even though award left it open to either party to demand further arbitration and obtain more extensive damages); J.G. Mailaender Druckmaschinenfabrik GmbH & Co. K.G. v. Otto Isenschmid Corp., 88 A.D.2d 654, 450 N.Y.S.2d 533 (2d Dep't 1982) (judicial settlement concluded in German court was equivalent of consent judgment and thus constituted foreign country judgment under Article 53); Overseas Development Bank in Liquidation v. Nothmann, 115 A.D.2d 719, 720-21, 496 N.Y.S.2d 534, 535-36 (2d Dep't 1985) (two English default money judgments recognized as enforceable in English pursuant to special order of High Court of Justice, Queen's Bench Division, even though enforcement of judgments was otherwise time-barred). Defendant protests that plaintiff cannot make the High Court Order a "judgment" simply by calling it a "judgment." (Def.'s Reply Mem. of Law at 5) The decisions discussed above, however, turn not on whether a foreign court decree is formally titled a "judgment," but rather whether the decree is "final, conclusive and enforceable where rendered," as required by CPLR 5302.

  Of particular importance here is the statutory requirement that the foreign decree be enforceable "where rendered" — that is, in the English courts. See, e.g., Seetransport, 989 F.2d 572, 583 (2d Cir. 1993) (remanding to determine "whether the decision of the Court of Appeals of Paris is enforceable in France") (emphasis added); Island Territory of Curacao v. Solitron Devices, Inc., 489 F.2d 1313, 1323 (2d Cir. 1973) (holding that decree "was conclusive and enforceable in Curacao"). In this case, defendant was given 22 days after service of the High Court Order to raise its objections to enforcement of the arbitral award, which it failed to do. In the absence of an objection by defendant, plaintiff was not required to take any additional action to secure a formal judgment even if it would in fact have been allowed to do so under English law. As the practice notes to the English Civil Procedure Rules explicitly state, plaintiff had "no need" to submit any "further application for permission" to enforce the High Court Order in England; once the notice period expired, plaintiff could enforce the Order "in the same manner as a judgment or order to the same effect." (Conroy Decl. at 3 (quoting Sweet & Maxwell, § 2E-232 (2002)); ...


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