Opinion
No. 04 Civ. 1683 (MBM).
October 7, 2004
KIRK M. LYONS, ESQ., EDWARD P. FLOOD, ESQ., Lyons, Skoufalos, Proios Flood, LLP, New York, NY, Attorneys for Plaintiff.
JEFFREY C. DANNENBERG, ESQ., Kestenbaum, Dannenberg Klein, LLP, New York, N.Y., Attorney for Defendant.
OPINION AND ORDER
This case arises on a motion by defendant Redi Corporation U.S.A. ("Redi Corp.") to vacate an ex parte Order of Attachment issued by this court on March 1, 2004. The pre-judgment attachment sought to enforce an Order of the English High Court of Justice, Queen's Bench Division ("High Court Order"), that had confirmed an arbitral award granted plaintiff V. Corp. Ltd. ("V. Corp.") by an arbitrator based in London. Under the New York Uniform Foreign Country Money-Judgments Recognition Act, located in Article 53 of the New York Civil Practice Law and Rules, New York extends judicial recognition to a "foreign country judgment which is final, conclusive and enforceable where rendered." N.Y. Civ. Prac. L. R. 5302 (McKinney 1997) ("CPLR"). The central issue in this case is whether the underlying High Court Order on which the attachment was based qualifies as a "judgment" under the terms of CPLR Article 53. As explained below, because the High Court Order in this case was the "functional equivalent" of a foreign country money judgment, Seetransport Wiking Trader Schiffahrtsgesellschaft MBH Co., Kommanditgesellschaft v.Navimpex Centrala Navala, 29 F.3d 79, 81 (2d Cir. 1994) ("Seetransport"), defendant's motion to vacate the Order of attachment is denied and plaintiff's motion to confirm the attachment is granted.
I.
V. Corp., a shipping company based in Liberia, contracted with Redi Corp., a New York corporation, to transport frozen poultry from the United States to Russia on the vessel Ref Star during April to June 2002. A dispute arose regarding the demurrage charges accrued by V. Corp. when its ship was held at port eight days beyond the contracted-for unloading period. In accordance with the shipping contract, V. Corp. initiated an arbitration proceeding in London to resolve the dispute. Redi Corp. declined to participate in the arbitration, citing a dispute over personal jurisdiction. The arbitrator, after hearing evidence presented by V. Corp., issued an award and costs to V. Corp. totaling $78,577.31. (Mavroghenis Affirmation, Mar. 22, 2004, Exs. 2, 4)V. Corp. then applied to the English High Court of Justice, Queen's Bench Division, for permission to enforce the arbitral award. The High Court, per Justice Gross, issued an Order on Jan. 22, 2004 permitting V. Corp. to enforce the arbitral award "in the same manner as a judgment or order to the same effect" and authorizing plaintiff "to enter judgment in terms of the said award." (Mavroghenis Affirmation, Feb. 25, 2004, Ex. H) The High Court Order was subject to a 22-day notice period during which Redi Corp. could object. V. Corp. served the High Court Order on the New York Secretary of State pursuant to New York Business Corporation Law § 306(b)(1) (McKinney 2003). The Secretary of State, however, had an incorrect address on file for Redi Corp., which had moved its offices from White Plains, New York to New York City. The Postal Service subsequently returned the papers as undeliverable with the notation "attempted unknown." (Lyons Reply Affirmation at 3, Ex. C) Redi Corp., thus having not received the High Court Order, did not object during the notice period.
V. Corp. then applied to this court for an ex parte order of attachment under New York CPLR 6201(5), which authorizes the attachment of assets to satisfy a foreign country judgment under CPLR Article 53. This court issued an Order of Attachment on March 1, 2004. After V. Corp. moved to confirm the Order of Attachment, Redi Corp. moved to vacate the attachment, arguing that (i) the High Court Order did not qualify as a "judgment" because it was a mere "order" granting permission to enforce the arbitral award as a judgment, and (ii) V. Corp. did not serve the High Court Order in an appropriate manner because the Order was not "process" deliverable to the New York Secretary of State. V. Corp. responds that the High Court Order was in fact a judgment because it was "final, conclusive and enforceable" in England and that plaintiffs appropriately served the Order on Redi Corp. through the Secretary of State. For the reasons stated below, defendant's claims are rejected.
Defendant also moved to dismiss the action for lack of personal jurisdiction during the underlying London arbitration. Defendant, however, voluntarily withdrew the motion during a conference before this court on March 12, 2004, subject to the argument being raised as an affirmative defense in future proceedings. (Dannenberg Decl. at 1-2)
II.
New York law governs actions brought in New York to enforce foreign judgments. S.C. Chimexim S.A. v. Velco Enterprises Ltd., 36 F. Supp. 2d 206, 211 (S.D.N.Y. 1999). New York Civil Practice Law and Rule 6201(5) permits pre-judgment attachment of a debtor's assets where an action has been brought for recognition of a foreign judgment under CPLR Article 53, the New York Uniform Foreign Country Money-Judgments Recognition Act. Article 53 in turn grants judicial recognition to "any judgment of a foreign state granting or denying recovery of a sum of money," subject to a few exceptions not applicable here. N.Y. CPLR 5301(b). This statutory grant of recognition is limited to foreign decrees that are "final, conclusive and enforceable where rendered even though an appeal therefrom is pending or it is subject to appeal." N.Y. CPLR 5302.
The provision that a foreign judgment be enforceable "where rendered" requires the court to focus on the law of the foreign country where the decree was issued. Guinness PLC v. Ward, 955 F.2d 875, 888-89 (4th Cir. 1992). The parties, therefore, have each presented declarations of lawyers versed in the English Civil Procedure Rules and the English Arbitration Act of 1996. In Lynda Conroy's Declaration in Opposition to Plaintiff's Motion for Attachment ("Conroy Declaration"), defendant's London solicitor outlines the English procedure for obtaining a court judgment after publication of an arbitral award. Section 66 of the Arbitration Act of 1996 provides the statutory basis on which an arbitral award can be enforced, stating:
(1) An award made by the [arbitral] tribunal pursuant to an arbitration agreement may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect.
(2) Where leave is so given, judgment may be entered in terms of the award.
Arbitration Act, 1996, c. 23, pt. I, § 66 (Eng.).
The practice notes accompanying section 66 state that there are "two methods" for enforcing an arbitral award: 1) by obtaining a court "order" granting leave to enforce the award "in the same manner as a judgment," or 2) by entering a formal "judgment" in terms of the award. (Conroy Decl. at 3 (quoting The White Book from Sweet and Maxwell, § 2E-232 (2002) ("Sweet Maxwell"))) These two methods "are not alternative, but successive" — that is, a party must first obtain an order before seeking a judgment. (Id.) However, a party that has completed step one of the procedure (obtaining an order) need not proceed to step two (obtaining a judgment). Once armed with an order confirming its arbitral award, a party may proceed directly to enforcing the award "as a judgment" without any "need for a further application" to the Court. (Id.) Nevertheless, the practice notes advise, it may be advantageous for a party to obtain a formal judgment in certain cases, such as when the party seeks to secure "the recognition of the judgment in a foreign court." (Id.)
In this case, plaintiff obtained an order of the English High Court of Justice permitting it to enforce the arbitral award "in the same manner as a Judgment or order" and authorizing it "to enter judgment in terms of the said award." (Mavroghenis Affirmation, Feb. 25, 2004, Ex. H) After obtaining the High Court Order, however, plaintiff did not obtain a formal judgment on the arbitral award from the High Court. Defendant relies on the two-step procedure outlined in the Conroy Declaration to argue that "plaintiff took only the first step in a two-step process." (Def.'s Reply Mem. of Law at 4) According to Redi Corp., the High Court Order was not itself a "judgment," but an "order" that "merely gave plaintiff a procedural basis to seek entry of a 'judgment,' which is a separate and distinct document." (Dannenberg Decl. at 3-4) This distinction between an "order" and a "judgment" is consequential, defendant continues, "because CPLR Article 53 applies only to foreign judgments, and not to foreign orders." (Def.'s Mem. of Law at 7) As a result, the High Court Order would not be "a legitimate basis for a pre-judgment attachment under CPLR 6201." (Id.)
Defendant's argument, however, elevates form over substance. It may well be that New York would refuse to recognize as a judgment in and of itself an arbitral award that had no confirming High Court Order. See Seetransport, 29 F.3d 79, 82 (2d Cir. 1994); 11 Jack B. Weinstein et al., New York Civil Practice ¶ 5301.03 (2004) (noting that Article 53 is "applicable only to recognition of foreign judgments which confirm foreign arbitral awards," not to arbitral awards alone). The High Court, however, did issue an order here, and after the expiration of the 22-day notice period during which defendant was allowed to object to enforcement of the arbitral award, the High Court Order qualified as "final, conclusive and enforceable" in the English courts. See N.Y. CPLR 5302. The High Court Order thus served as the "functional equivalent" of an English judgment. Seetransport, 29 F.3d at 81.
New York has a "long-standing" tradition of recognizing and enforcing foreign country judgments. S.C. Chimexim S.A. v.Velco Enterprises Ltd., 36 F. Supp. 2d 206, 211 (S.D.N.Y. 1999) (citations omitted); Seetransport, 29 F.3d at 81 ("New York is 'relatively generous' in recognizing foreign judgments.") (citation omitted). In Seetransport, the Second Circuit examined whether a decree by the Paris Court of Appeals that had rejected the defendant's application to annul an arbitral award "was itself an enforceable judgment" under Article 53. 29 F.3d at 81. Under French law, the Paris Court of Appeals' dismissal had conferred "exequatur" on the arbitral award, rendering the award enforceable in France. Id. The Second Circuit held that although exequatur "seem[ed] to presuppose" the existence of an executable judgment, the arbitral award-with-exequatur was the "functional equivalent" of a French judgment granting the sums specified in the arbitral award. Id. at 81-82. The "decree accomplishing that result," therefore, was subject to recognition under New York's Article 53 as an enforceable judgment in its own right. Id. at 82.
Neither the Second Circuit nor the District Court opinions in Seetransport indicate that any affirmative steps were taken by the plaintiff to secure a formal judgment in the French courts. It thus appears that the only "judgment" in the case on which exequatur could have been conferred was the final award of the arbitral tribunal. See Seetransport, 29 F.3d at 81-82.
Several other cases have demonstrated the functional, as opposed to formalistic, approach that courts have taken when deciding which judicial acts qualify for recognition as foreign country judgments. See, e.g., Island Territory of Curacao v.Solitron Devices, Inc., 489 F.2d 1313, 1317, 1323 (2d Cir. 1973) (Curacao court's issuance of "writ of execution" on local arbitral award functioned as final judgment under Curacao law, even though award left it open to either party to demand further arbitration and obtain more extensive damages); J.G. Mailaender Druckmaschinenfabrik GmbH Co. K.G. v. Otto Isenschmid Corp., 88 A.D.2d 654, 450 N.Y.S.2d 533 (2d Dep't 1982) (judicial settlement concluded in German court was equivalent of consent judgment and thus constituted foreign country judgment under Article 53); Overseas Development Bank in Liquidation v.Nothmann, 115 A.D.2d 719, 720-21, 496 N.Y.S.2d 534, 535-36 (2d Dep't 1985) (two English default money judgments recognized as enforceable in English pursuant to special order of High Court of Justice, Queen's Bench Division, even though enforcement of judgments was otherwise time-barred). Defendant protests that plaintiff cannot make the High Court Order a "judgment" simply by calling it a "judgment." (Def.'s Reply Mem. of Law at 5) The decisions discussed above, however, turn not on whether a foreign court decree is formally titled a "judgment," but rather whether the decree is "final, conclusive and enforceable where rendered," as required by CPLR 5302.
Of particular importance here is the statutory requirement that the foreign decree be enforceable "where rendered" — that is, in the English courts. See, e.g., Seetransport, 989 F.2d 572, 583 (2d Cir. 1993) (remanding to determine "whether the decision of the Court of Appeals of Paris is enforceable in France") (emphasis added); Island Territory of Curacao v. Solitron Devices, Inc., 489 F.2d 1313, 1323 (2d Cir. 1973) (holding that decree "was conclusive and enforceable in Curacao"). In this case, defendant was given 22 days after service of the High Court Order to raise its objections to enforcement of the arbitral award, which it failed to do. In the absence of an objection by defendant, plaintiff was not required to take any additional action to secure a formal judgment even if it would in fact have been allowed to do so under English law. As the practice notes to the English Civil Procedure Rules explicitly state, plaintiff had "no need" to submit any "further application for permission" to enforce the High Court Order in England; once the notice period expired, plaintiff could enforce the Order "in the same manner as a judgment or order to the same effect." (Conroy Decl. at 3 (quoting Sweet Maxwell, § 2E-232 (2002)); see also Def.'s Reply Mem. of Law at 3 (conceding that "if enforcement of the award is sought locally, there may be little advantage in going through the exercise of having a judgment entered in Court, inasmuch as the award may be enforced in the same manner as a judgment could be enforced") (emphasis added))
The High Court Order, upon the completion of the 22-day notice period, thus bore all the indicia of a judgment: final, conclusive, and enforceable "where rendered." See Island Territory of Curacao v. Solitron Devices, Inc., 489 F.2d 1313, 1317, 1323 (2d Cir. 1973) (writ of execution on local arbitral award rendered a final, conclusive, and enforceable judgment in Curacao where neither party availed itself of three-month opportunity to seek review of award before it became final); 11 Jack B. Weinstein et al., New York Civil Practice ¶ 5302.01[1] (2004) ("The judgment is considered final when the litigation has been disposed of and no issues remain for determination."). Although it may indeed have been, in defendant's word, "preferable" for plaintiff to have taken the second step of obtaining a more formal judgment from the High Court (Def.'s Reply Mem. of Law at 3), the absence of a more formal English judgment here is not fatal.
III.
Defendant attributes its failure to enter a timely objection to the High Court Order to a deliberate effort by plaintiff to "prevent defendant from invoking its right to seek relief from the [arbitral] Award" within 22 days of service of the Order. (Def.'s Mem. of Law at 9) Specifically, defendant argues that plaintiff should have delivered the High Court Order to Redi Corp.'s New York City office rather than serving the Order on the New York Secretary of State in Albany, which had an incorrect address on file for Redi Corp. Defendant alleges that such service was "not only designed to avoid giv[ing] defendant timely notice of the 22-day notice period," but was also "procedurally improper" under the New York Business Corporation Law. (Id. at 10) For the reasons stated below, this claim is without merit.
Under sections 304(a) and 306(b)(1) of the New York Business Corporation Law, service of "process" may be made on a domestic corporation by delivery to the Secretary of State's office, which then will forward the process to the defendant corporation by certified mail. The statute broadly defines "process" as
judicial process and all orders, demands, notices or other papers required or permitted by law to be personally served on a domestic or foreign corporation, for the purpose of acquiring jurisdiction of such corporation in any action or proceeding, civil or criminal, whether judicial, administrative, arbitrative or otherwise, in this state or in the federal courts sitting in or for this state.
N.Y. Bus. Corp. L. § 102(11) (McKinney 2003). Such service is complete upon delivery to the Secretary of State, not receipt of the process by defendant. N.Y. Bus. Corp. L. § 306(b)(1);Associated Imports, Inc. v. Leon Amiel Publisher, Inc., 168 A.D.2d 354, 562 N.Y.S.2d 678, 679 (1st Dep't 1990).
Defendant argues that there is a distinction between service of "process" under section 306(b)(1) and service of a court "order" such as the High Court Order here. Relying on the language of section 102(11), defendant contends that the High Court Order was not required "by law" to be personally served on Redi Corp. "Instead," defendant posits, "service of notice of the High Court Order was specifically required by the High Court, itself" in its Order. (Def.'s Mem. of Law at 10)
This line of argument is unpersuasive for two reasons. First, personal service of the High Court Order on Redi Corp. was "required or permitted," § 306(b)(1) (emphasis added), not only by the High Court Order, but also by the English Civil Procedure Rules. See, e.g., Civil Procedure Rules, (1998) SI 1998/3132, pt. 6 (III), R. 6.24(1)(a) (order giving permission to enforce an arbitral award may be served by "any method . . . permitted by the law of the country in which it is to be served"); Id., pt. 40 (I), R. 40.4 ("[A]ny [court] order made otherwise than at trial must be served on . . . the applicant and the respondent");Id., pt. 6 (I), R. 6.2 ("A document may be served by . . . personal service. . . ."). Second, the High Court Order was served "for the purpose of acquiring jurisdiction" in New York over Redi Corp. N.Y. Bus. Corp. L. § 102(11). Such service of the document was necessary to make the High Court Order a "final, conclusive and enforceable" judgment in England, as required by New York CPLR 5302. Absent this finality in the English courts, plaintiff would not have been able to obtain an order of attachment from this court.
The only case that defendant cites for its technical construction of "process" served "by law" is Everest Enterprises, Inc. v. Alphatape Sales Co., 243 N.Y.S.2d 322
(Sup.Ct. N.Y. County 1963). There, the Court ruled that service of an order to show cause on the Secretary of State was improper where such service, due to a two-day return date, "inevitably meant a default." Id. at 323. The Court found it "highly inequitable" to impose the "drastic relief" requested by plaintiff without allowing defendant an extension of time. Id. at 322, 323. By contrast, no such equities are present here. Redi Corp. would have received actual, timely notice of the High Court Order had it notified the Secretary of State of its new address when it moved from White Plains, New York to New York City. The risks of such mistakes or oversights are to be borne by defendant, not by plaintiff. See, e.g., Ameritek Const. Corp. v. Gas, Wash Go, Inc., 247 A.D.2d 418, 419, 668 N.Y.S.2d 663, 664 (2d Dep't 1998); Associated Imports, Inc. v. Leon Amiel Publisher, Inc., 168 A.D.2d 354, 562 N.Y.S.2d 678, 679 (1st Dep't 1990);Colonial Sand Stone Co. v. Enrico Sons Contractors, Inc., 66 A.D.2d 705, 411 N.Y.S.2d 244, 245 (1st Dep't 1978).
* * *
For the reasons stated above, defendant's motion to vacate the Order of Attachment of March 1, 2004 is denied and plaintiff's motion to confirm the Order of Attachment is granted.SO ORDERED: