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British Marine PLC v. Aavanti Shipping & Chartering Ltd.

United States District Court, E.D. New York

June 3, 2014



BRIAN M. COGAN, District Judge.

This matter is before the Court on several motions. Defendant Aavanti Shipping & Chartering, Ltd. ("Aavanti") moves to stay this action in light of the arbitration between British Marine and Aavanti currently pending in London. Defendants Ruchi Soya Industries, Ltd. ("Ruchi") and Anik Industries, Ltd. ("Anik") join Aavanti's motion, and separately move to dismiss the Second Amended Complaint under the doctrine of forum non conveniens. Finally, plaintiff British Marine PLC ("British Marine") moves to strike several affirmative defenses asserted by defendants Ruchi and Anik. For the reasons that follow, defendants' motion to dismiss on forum non conveniens grounds is denied; defendants' motion to stay is granted; and plaintiff's motion to strike is denied.

British Marine began this action in February 2013, alleging that Aavanti had breached a maritime Contract of Affreightment ("COA"). The Complaint further alleged that Ruchi and Anik were liable for Aavanti's breach under two different theories, either because they (1) guaranteed Aavanti's performance or (2) were alter egos of Aavanti. The Complaint also alleged that "[p]ursuant to the terms of the COA, disputes are to be resolved by arbitration in London pursuant to English law" and that British Marine "brings this action solely to obtain quasi-in-rem jurisdiction and security for its damages plus interest and the costs for London arbitration."

The Court granted British Marine's request for an Order of Maritime Attachment and Garnishment (the "Attachment Order") pursuant to Rule B of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil Procedure (the "Supplemental Rules"). British Marine successfully attached funds owed to Ruchi by a third-party garnishee, Wego Chemical & Mineral Corp. ("Wego"). Wego initially ignored the Attachment Order and made payment on debts it owed to Ruchi at the time it was served; after a hearing, Wego was ordered to deposit approximately $150, 000 into the Court's registry, representing the amounts it owed to Ruchi at the time plaintiff served Wego with the Attachment Order. The Court subsequently denied motions by defendants to vacate the attachment and dismiss the Complaint.

The parties have identified to the Court three parallel proceedings in other countries that relate to same claims at issue in this case. There are two arbitrations underway in London: one between British Marine and Aavanti, addressing British Marine's claim of breach of the COA, and a separate arbitration between British Marine, Ruchi, and Anik, addressing British Marine's claim that those defendants guaranteed Aavanti's performance of the COA. Neither arbitration encompasses British Marine's alter ego theory. There is also an action brought by Ruchi and Anik against British Marine in India, seeking (1) a declaration that no valid guarantee of Aavanti's performance exists under Indian law and (2) to enjoin British Marine from prosecuting any action arising from the alleged breach of the COA in any foreign court, including this one.

Familiarity with the facts, procedural history, and the Court's prior decisions in this case is otherwise assumed, and will only be recounted further as necessary to explain the Court's rulings.


I. Forum Non-Conveniens

The Second Circuit has established a three-step framework for analyzing a motion to dismiss based on forum non conveniens. A reviewing court must (1) determine the degree of deference to be afforded to the plaintiff's choice of forum; (2) examine whether an adequate alternative forum exists; and (3) balance the private and public factors enumerated by the Supreme Court in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 67 S.Ct. 839 (1947). See, e.g., Aracruz Trading Ltd. v. Japaul Oil and Mar. Servs., PLC, No. 08 Civ. 3511(JGK), 2009 WL 667298, at *3 (S.D.N.Y. Mar. 16, 2009) (citing Iragorri v. United Tech. Corp., 274 F.3d 65, 73-74 (2d Cir. 2001) (en banc)). A motion to dismiss for forum non conveniens should not be granted "unless the balance is strongly in favor of the defendant." Norex Petroleum Ltd. v. Access Indus., Inc., 416 F.3d 146, 154 (2d Cir. 2005).

At the outset, it is worth clarifying the claims that British Marine is asserting. British Marine's Second Amended Complaint alleges three causes of action: (1) that Aavanti breached the maritime COA; (2) that Ruchi and Anik breached their guarantees of Aavanti's performance of the COA; and (3) that Ruchi and Anik are liable for Aavanti's breach of the COA, because they are alter egos of Aavanti.

British Marine states that it only seeks to litigate the merits of its alter ego claim in this Court, and that the other claims will be resolved in arbitration. Of course, corporate veil piercing is not an independent cause of action, "but rather is a means of imposing liability on an underlying cause of action." Peacock v. Thomas, 516 U.S. 349, 354, 116 S.Ct. 862 (1996). Thus, the parties agree that to succeed on its alter ego claims, British Marine will first have to prevail in its arbitration against Aavanti in London. The question of whether Aavanti breached the COA or whether Ruchi and Anik guaranteed Aavanti's performance will not be before this Court.[1] Should British Marine prevail in London against Aavanti, the sole inquiry before this Court would be whether British Marine can demonstrate that it is entitled to pierce the corporate veil and hold Ruchi and Anik liable for Aavanti's breach.

But Ruchi and Anik's motion appears to seek forum non conveniens dismissal of both the guarantee and the alter ego claims. Because British Marine's guarantee claims will not be resolved in this Court, the Court sees no reason to exercise its discretion to dismiss these claims on forum non conveniens grounds. A plaintiff is permitted "to invoke the admiralty jurisdiction of federal courts to attach the defendant's property according to the usual course of admiralty proceedings, ' such as the procedure authorized by Supplemental Rule B, and at the same time to have the merits of the dispute resolved in arbitration." Result Shipping Co., Ltd. v. Ferruzzi Trading USA Inc., 56 F.3d 394, 399 (2d Cir. 1995) (quoting 9 U.S.C. ยง 8); see also Seatrek Trans PTE Ltd. v. Regalindo Res. PTE Ltd., No. 08 Civ. 551, 2008 U.S. Dist. LEXIS 30578, at *6-7 (S.D.N.Y. Mar. 26, 2008) (denying forum non conveniens motion to dismiss maritime attachment proceeding where merits of the dispute would be resolved in another forum).

When, and if, British Marine seeks to apply the security it has attached in this Court towards the satisfaction of a judgment in its favor on the guarantee claims, there will be no inconvenience to any party, and certainly not to any witness because no witness testimony would be required. The merits of the guarantee claims will either be resolved through arbitration in London or litigation in India. The Court makes no finding as to which of these fora is more appropriate, because the parties' briefing at best obliquely requests that the Court do so. It is sufficient for present purposes to note that this action is only to obtain jurisdiction over defendants and to provide security for a judgment that British Marine might secure elsewhere. The forum non conveniens motion is denied as to the guarantee claims.

The Court also declines to exercise its discretion and dismiss British Marine's alter ego claim under forum non conveniens. It is true that, as a foreign plaintiff, British Marine's choice of forum receives less deference than that of a plaintiff suing in his own home forum. Iragorri, 274 F.3d at 71. Nor does this action have a particularly strong connection to this District. On the other hand, it does not appear that plaintiff chose this forum for any improper purpose. Rather, "plaintiff's choice of this forum appears to rest primarily on its ability to attach assets of the defendant that pass through this district pursuant to Rule B, a consideration that does not bear the ...

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