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NV Petrus SA v. LPG Trading Corp.

United States District Court, E.D. New York

May 3, 2017

NV PETRUS SA and PETROLEUM RESOURCES PETRUS SA, Plaintiffs,
v.
LPG TRADING CORP., VIKTORIA KRAKOVSKAYA, and EDUARD K. KRAKOVSKY, Defendants.

MEMORANDUM & ORDER

          NICHOLAS G. GARAUFIS, United States District Judge.

         Before the court is Defendants LPG Trading Corp., Viktoria Krakovskaya, and Eduard K. Krakovsky's Motion to Dismiss based on forum non conveniens. (Mot. to Dismiss ("Mot.") (Dkt. 88).) For the reasons set forth below, Defendants' Motion is DENIED.

         I. BACKGROUND

         Plaintiffs NV Petrus SA ("Petrus") and Petroleum Resources Petrus SA ("PRP") commenced this breach of contract action in this court on May 19, 2014. (Compl. (Dkt. 1).) The parties agree that the operative contracts contain arbitration clauses, requiring Plaintiffs and Defendants to arbitrate any disputes arising out of the contracts before the London Court of International Arbitration ("LCIA"). (See Ex. J to Mot. ("Petrus Contract") (Dkt. 88-11); Ex. K to Mot. ("PRP Contract") (Dkt. 88-12).) In their Answer to the initial Complaint, Defendants asserted two counterclaims: in their First Counterclaim, Defendants sought money damages for Plaintiffs' alleged breach of the parties' agreements; in the Second Counterclaim, Defendants alleged that this court does not have jurisdiction because the parties agreed to arbitrate all disputes arising out of the contracts. (Answer (Dkt. 5).)

         Plaintiffs subsequently amended their Complaint. (See First Am. Compl. ("FAC") (Dkt. 33).) In Defendants' Answer to the First Amended Complaint, Defendants reasserted their First and Second Counterclaims; added a Third and Fourth Counterclaim, seeking money damages; and reiterated that the court lacked jurisdiction, as the parties' dispute was subject to arbitration before the LCIA and would be subject to the laws of England. (Answer to FAC (Dkt. 38).)

         The parties have since conducted extensive discovery, engaged in substantive motion practice, participated in numerous court conferences and a court-sponsored mediation, prepared several iterations of a joint pre-trial order, and drafted both motions in limine and proposed jury instructions in advance of trial. Trial is scheduled to begin in less than two weeks, on May 15, 2017. Notwithstanding the fact that the parties have litigated this case for nearly three years, during the pre-trial conference on April 4, 2017, Defendants for the first time sought and received leave from the court to file a motion to dismiss for forum non conveniens. Defendants filed the motion on April 14, 2017, and Plaintiffs filed their opposition to the motion on April 28, 2017.

         II. DISCUSSION

         Defendants argue that the "forum selection clause, " i.e. the arbitration clause, in the parties' contracts is mandatory and may be enforced "at any time." (See generally Defs. Mem. in Supp. of Mot. ("Defs. Mem.") (Dkt. 88-1).) Defendants further assert that Plaintiffs are not prejudiced by Defendants' belated motion to dismiss. (See id. ¶¶ 57-63.) Plaintiffs oppose the motion, arguing that Defendants have waived their right to arbitrate as well as their argument that English law governs the dispute. (See generally Pls.. Mem. in Opp'n to Mot. ("Pls.. Opp'n") (Dkt. 107).)

         The court finds that Defendants have waived their right to arbitration as well as any argument they may have had that English law governs the action. Accordingly, Defendants' motion to dismiss is denied.

         A. DEFENDANTS WAIVED THEIR RIGHT TO ARBITRATE THIS DISPUTE

         1. Legal Standard

         Foreign arbitration clauses are a "subset of foreign forum selection clauses." Vimar Seguros v Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 534 (1995). "[T]he appropriate way to enforce a forum-selection clause pointing to a state or foreign forum is through the doctrine of forum non conveniens."[1] Atl. Marine Const. Co., Inc. v. U.S. Dist. Ct. for W. Dist. of Tex., 134 S.Ct. 568, 580 (2013). A motion to dismiss on forum non conveniens grounds may be made at any time as a procedural matter;[2] however, a court may nonetheless consider the defendant's delay in bringing such a motion. See Wave Studio, LLC v. Gen. Hotel Mgmt. Ltd., No. 13-CV-9239 (CS), 2017 WL 972117, at *5 (S.D.N.Y. Mar. 10, 2017).

         "[T]he right to arbitration, like any other contract right, can be waived." Doctor's Assocs., Inc. v. Distaio, 66 F.3d 438, 455 (2d Cir. 1995) (internal quotation marks and citation omitted). Because there is a strong federal policy favoring arbitration, "any doubts concerning whether there has been a waiver are resolved in favor of arbitration." PPG Indus., Inc. v. Webster Auto Parts, Inc., 128 F.3d 103, 107 (2d Cir. 1997) (internal quotation marks and citations omitted). "Nonetheless, a party waives its right to arbitration when it engages in protracted litigation that prejudices the opposing party." Id. hi determining whether a party has waived this right, [3] courts consider the following factors: "(1) the time elapsed from when litigation was commenced until the request for arbitration; (2) the amount of litigation to date, including motion practice and discovery; and (3) proof of prejudice." La. Stadium & Exposition Dist. v. Merrill Lynch. Pierce, Fenner & Smith Inc., 626 F.3d 156, 159 (2d Cir. 2010) (internal quotation marks and citation omitted). "There is no rigid formula or bright-line rule for identifying when a party has waived its right to arbitration; rather, the above factors must be applied to the specific context of each particular case." Id. (internal quotation marks and citation omitted). "That said, [t]he key to a waiver analysis is prejudice." Id. (internal quotation marks and citation omitted) (alteration in original).

         Prejudice "refers to the inherent unfairness-in terms of delay, expense, or damage to a party's legal position-that occurs when the party's opponent forces it to litigate an issue and later seeks to arbitrate that same issue." Doctor's Assocs., 107 F.3d at 134. Such prejudice has been found where "'a party seeking to compel arbitration engages in discovery procedures not available in arbitration, makes motions going to the merits of an adversary's claims, or delays invoking arbitration rights while the adversary incurs unnecessary delay or expense.'" S &R ...


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