Plaintiff, Ameropa AG, brings this action seeking to enforce a foreign arbitral award and a foreign money judgment. Plaintiff has filed a motion to carry out the purpose of this action. Defendant, Havi Ocean Company LLC, opposes the motion on the grounds that such enforcement would violate United States and New York public policy. Defendant has filed a motion to compel nonparty Ameropa North America, Inc. to submit to discovery so that defendant may seek support for its public policy defenses.
Plaintiff's motion is granted. Defendant's motion is denied.
Plaintiff is a Swiss company involved in the trading of commodities. One of these commodities is sulfuric acid. Plaintiff has a U.S. subsidiary, Ameropa North America, Inc., with offices in Tampa, Florida, and Columbia, Missouri. Defendant is a United Arab Emirates company also involved in the trading of commodities, including sulfuric acid. On August 2, 2007, the parties entered into a contract whereby plaintiff agreed to buy and defendant agreed to sell 18,000 metric tons of sulfuric acid, in two lots of 9,000 metric tons each. The source of the sulfuric acid was Iran and the ultimate destination of the sulfuric acid was Venezuela.
At all relevant times, the U.S. had in place a sanctions regime against Iran prohibiting virtually all facilitation of trade by U.S. persons involving goods of Iranian origin. See Exec. Order No. 13,059 (Aug. 19, 1997). Violation of these sanctions would be a serious crime, punishable by up to 20 years in prison. 31 C.F.R. § 560.701(a)(2). Clearly, the U.S. has a national policy to discourage trade with Iran.
Defendant breached the sulfuric acid contract by only delivering one of the two 9,000 metric ton lots. Pursuant to an arbitration clause contained in the contract, plaintiff proceeded against defendant in the Arbitration Tribunal of the Chamber of Commerce of Hamburg, in Hamburg, Germany. On May 25, 2009, the tribunal ruled in favor of plaintiff and ordered defendant to pay plaintiff €720,216.03. Interest to date has increased the total to over €850,000. Defendant unsuccessfully appealed the tribunal's award and, as a result, plaintiff was awarded a separate judgment of €17,166.17 in attorney's fees for its successful defense of those appeals, and plaintiff has a judgment for this amount.
Plaintiff has so far been unsuccessful in its efforts to enforce the awarded judgment in defendant's home jurisdiction of Dubai, United Arab Emirates. Plaintiff is now resorting to the U.S., and seeks in this action to begin that process by moving to have the arbitral award confirmed pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 207, which codified the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("Convention"). 21 U.S.T. 2517 (entered into force Dec. 29, 1970). Plaintiff also moves to have the money judgment for attorney's fees recognized and enforced in New York under the Uniform Foreign Money Judgment Recognition Act ("UFMJRA"), N.Y. C.P.L.R. § 5303.
Defendant claims that the arbitral award and the money judgment may be unenforceable as against U.S. and New York public policy, respectively, because employees from plaintiff's U.S. subsidiary, Ameropa North America, Inc., may have been involved in the sulfuric acid transaction, thereby running afoul of the U.S. sanction regime against Iran, which, as discussed above, prohibits most facilitation of trade with Iran by U.S. persons. Defendant asserts that if this is the case, allowing plaintiff to collect on judgments that had their origin in a violation of U.S. sanctions against Iran would be contrary to U.S. and New York public policy.
Defendant offers no basis for its suggestion that employees of Ameropa North America, Inc. may have been involved in the sulfuric acid transaction, but instead seeks, through its motion, to compel Ameropa North America, Inc., a non-party, to submit to discovery so that defendant may determine if its accusations have any foundation.
Plaintiff opposes defendant's motion to compel discovery, claiming that such discovery is improper in an enforcement proceeding and that, regardless, the violations claimed by defendant would not support a public policy exception to recognition of the arbitral award or the money judgment.
For exceptions to enforcement, the FAA refers to "grounds for refusal . . . specified in the . . . Convention." 9 U.S.C. § 207. Article V of the Convention, in turn, states:
Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that . . . [t]he recognition or enforcement ...