The opinion of the court was delivered by: Sidney H. Stein, U.S. District Judge.
Constellation Energy Commodities Group Inc. petitions this Court to confirm two London arbitration awards entered against respondent Transfield ER Cape Ltd. ("ER Cape"). Constellation also seeks to enforce the awards against ER Cape's alleged alter ego, respondent Transfield ER Limited ("ER Limited"), which was not a party to the arbitrations. ER Cape has filed a cross-motion to dismiss Constellation's petition on the grounds of forum non conveniens, improper venue, and failure to state a claim. ER Limited has not appeared in this action
Because petitioner's choice of venue is appropriate, this Court confirms the arbitration awards against ER Cape. However, it declines to enforce the awards against ER Limited because Constellation has failed to state a claim for alter ego liability.
The following facts are taken from the amended petition and the declarations submitted in connection with the pending motions.
Constellation is a citizen of Maryland. (Am. Pet. ¶ 2.) ER Cape and ER Limited are both British Virgin Islands ("BVI") corporations with principal offices in Hong Kong. (Id. ¶ 3.) Respondents were previously registered with New York Department of State, Division of Corporations, for authorization to do business in New York. (Id.). ER Limited became "inactive" in New York as of May 10, 2010, and ER Cape became "inactive" in New York as of June 10, 2010. (See Id. ¶¶ 4-5.) ER Cape is now undergoing liquidation proceedings before the Commercial Division of the High Court of Justice in the in the BVI. (See Letter from James H. Power to Judge Stein (Nov. 30, 2010); Letter from Jeremy J.O. Harwood to Judge Stein (Oct. 27, 2010).)
Constellation and ER Cape were parties to a contract of affreightment ("COA") dated May 23, 2008, for the shipment of iron ore from Brazil to China. (Am. Pet.¶¶ 6-7; COA, Ex. 1 to Supp. Decl. of Damian James Honey dated July 29, 2011 ("Honey Decl.").) The two parties negotiated and executed the COA in Hong Kong. (Declaration of Dylan Wu dated Aug. 12, 2010 ("Wu Decl.") ¶ 12.) The COA provides that: "Any disputes arising under the Contract shall be settled amicably. In case no such settlement can be reached, the matter in dispute shall be referred to three arbitrators at London and according to English Law." (COA ¶ 26; Am. Pet.¶ 8). C. Arbitration Awards When disputes arose between Constellation and ER Cape over scheduled iron ore shipments, Constellation commenced two arbitrations in London against ER Cape alone pursuant to the COA. (Am. Pet.¶¶ 7-11, 17-21.) Each arbitration resulted in an award in favor of Constellation and against ER Cape. (Id. ¶¶ 11, 21;Exs. 2 and 3 to Honey Decl.) The first award, dated April 26, 2010, ordered ER Cape to pay Constellation $7,577,600, plus interest at a rate of 4.5 percent from April 15, 2009 to the date of payment. (Am. Pet. ¶ 11; Ex. 2 to Honey Decl. at 4.) That award also entitled Constellation to seek reimbursement for the 40,559 in arbitration costs it paid, plus 4.5 percent interest from the date of Constellation's payment to the date of reimbursement. (Am. Pet. ¶¶ 13-14; Ex. 2 to Honey Decl. at 4.)
The second award, dated April 28, 2010, ordered ER Cape to pay Constellation $7,467,608, plus interest at a rate of 4 percent from May 17, 2009 to the date of payment. (Am. Pet. ¶ 21; Ex. 3 to Honey Decl. at 3.) That award reserved judgment on arbitration costs, of which Constellation ultimately paid 55,475. (Am. Pet. ¶¶ 23-24; Ex. 3 to Honey Decl. at 3.)
ER Cape appealed both arbitration awards to the United Kingdom High Court of Justice. (Id. ¶¶ 16, 25; see also Wu Decl. ¶¶ 8-9.) The High Court of Justice rejected those appeals by orders dated October 4 and October 7, 2010. (See Exs. A and B toLetter from Jeremy J.O. Harwood to Judge Stein (Oct. 27, 2010).) ER Cape has not yet paid either of the awards.
Constellation commenced this action in June 2010 pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention"), 9 U.S.C. § 203, and this Court's admiralty and maritime jurisdiction, 28 U.S.C. §§ 1331, 1333. ER Cape was served with process on June 3, 2010 while it was still registered as a foreign corporation in the state of New York. Constellation maintains that service on ER Cape also constituted service on ER Limited because the latter is, allegedly, the alter ego of the former. (Am. Pet. ¶¶ 4-5.) ER Limited has not appeared in this action.
Three motions are pending. The first is Constellation's amended petition to confirm the arbitration awards, which asserts two causes of action: (1) recognition and enforcement of the awards against both respondents jointly and severally, and (2) alter ego and veil piercing liability on the theory that ER Cape is merely a captive corporation through which its parent, ER Limited, entered the COA. The second motion takes a somewhat unusual procedural posture: Constellation moved, separately from the amended petition, for summary confirmation of the arbitration awards against ER Cape and for attorneys' fees and costs incurred in seeking such confirmation. Third, ER Cape moved to dismiss the amended petition for forum non conveniens, improper venue pursuant to Fed. R. Civ. P. 12(b)(3), and failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). Through this motion to dismiss, ER Cape opposed summary confirmation of the arbitration awards.
ER Cape seeks to dismiss the amended petition on the ground of forum non conveniens, contending that the BVI, United Kingdom, or Hong Kong would all be more appropriate locations to litigate this action than the United States. "[T]he doctrine of forum non conveniens contemplates the dismissal of lawsuits brought by plaintiffs in their favored forum in favor of adjudication in a foreign court." Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 101 (2d Cir. 2000). "Whether an action should be dismissed pursuant to the doctrine of forum non conveniens is a discretionary determination," id. at 99, which a court may make in confirmation proceedings brought pursuant to the New York Convention, In re Matter of the Arbitration Between Monegasque de Reassurances, S.A.M. v. NAK Naftogaz of Ukraine,311 F.3d 488, 496 (2d Cir. 2002).
The United States Court of Appeals for the Second Circuit has established a three-step inquiry to resolve a motion to dismiss an action for forum non conveniens. See Iragorri v. United Techs. Corp., 274 F.3d 65, 73-74 (2d Cir. 2001) (en banc). First, a court decides what amount of deference is owed the plaintiff's choice of forum. Id. Second, a court determines whether an adequate alternative forum exists. Third, if an adequate alternative forum exists, a court balances the public and private interest factors enumerated by the United States Supreme Court in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-09 (1947). See Iragorri, 274 F.3d at 73-74."[U]nless ...