Appeal from a judgment of the United States District Court for the Southern District of New York (Robert L. Carter, Judge) dismissing a complaint on the grounds of forum non conveniens. The district court held that a non-signatory to agreements containing forum selection provisions is not bound by these provisions even if it is a successor in interest to a signatory and otherwise bound by the agreements. We vacate the judgment.
The opinion of the court was delivered by: Winter, Circuit Judge
Before: WINTER, CABRANES, and SACK, Circuit Judges.
Aguas Lenders Recovery Group, LLC ("ALRG") appeals from Judge Carter's dismissal of its complaint on the ground of forum non conveniens. The principal issue is whether, for the purposes of the doctrine of forum non conveniens, a non-signatory to an agreement may be bound by a forum selection clause and forum non conveniens waiver contained in contracts entered into by an entity alleged to be a predecessor in interest.
We hold that such a non-signatory may be so bound. We therefore vacate the judgment and remand for limited discovery and a hearing on whether Agua y Saneamientos Argentinos, S.A. ("AySA") is a successor in interest to Aguas Argentinas, S.A. ("Aguas").
This is an appeal from a dismissal of a complaint without a factual hearing on the grounds of forum non conveniens. We therefore accept the facts alleged in the complaint as true. See Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 93 n.1 (2d Cir. 2000).*fn2
In 1992, the Republic of Argentina solicited bids from private companies for a thirty-year concession, which allowed the winning bidder to modernize and operate Buenos Aires' residential water and sewer system and collect fees for its use. Until then, a wholly government-owned company, Obras Sanitarias de la Nación, had provided the services.
Aguas was the winning bidder. It consisted of a consortium of seven companies that included two multinational water companies, Suez, S.A., and Sociedad General de Aguas de Barcelona, S.A. On April 28, 1993, Aguas entered into the concession agreement with the Argentine government and was thereafter incorporated under the laws of Argentina. Under the terms of the concession, the Argentine government ceded to Aquas the right to possess and use certain assets necessary to the operation and maintenance of the water and sewer system, but expressly reserved title to the assets. Aguas provided water and sewer services to Buenos Aires from 1993 to 2006.
The concession was expected to require $4.1 billion in capital investments over its duration, but a substantial portion had to be invested early for modernization and expansion of the systems. Aguas secured financing, primarily by recourse to international capital markets, including the United States. On July 15, 2004, following a series of defaults on the loan agreements, Aguas restructured a number of these loans in two interim financial agreements ("IFA's"). Pursuant to these agreements, the lenders bought out some of Aguas's debt in exchange for payment of past-due interest according to a schedule of installments. The IFA's contained a New York forum selection clause and a forum non conveniens waiver (collectively "forum provisions"). They also contained a New York choice of law provision and a provision binding "successors and assigns."*fn3
In January 2005, Aguas defaulted on the interest payments owed under the IFA's. Subsequently, in July 2005, Aquas initiated a contractually established procedure for the termination of the concession. Thereafter, on March 21, 2006, the Argentine government terminated the concession, alleging that Aguas had failed to meet its obligations under the concession, at least in part due to toxic levels of nitrates found in various water sources. The Argentine government temporarily assumed operation of the water and sewer facilities pursuant to an executive decree. It soon after assigned the concession to AySA, the appellee here, an entity incorporated on March 3, 2006 for that purpose.
The Argentine government currently owns ninety percent of AySA's stock while AySA's employees, virtually all of whom are former employees of Aguas, own the remaining ten percent pursuant to an employee stock ownership program. The assets transferred to AySA included not only the concession itself but physical assets that had been built, improved, or acquired with the money borrowed by Aguas. No payment was made to Aguas for the transfer of the assets, or to any of its lenders on the outstanding debt.
After the Argentine government terminated the concession with Aguas, Aguas filed for protection from its creditors on April 28, 2006. At the time of the district court's decision under review, ...