No. 12 Civ. 5388 (RJS)
Petitioner is represented by George G. Cornell and John R Keough, III of Clyde & Co. US LLP, 405 Lexington Avenue, New York, New York 10174. Respondent is represented by Timothy G. Griffin, 77 Pondfield Road, Bronxville, New York 10708.
MEMORANDUM AND ORDER :
Petitioner STX Pan Ocean Shipping Co. Ltd. ("STX") seeks confirmation of a foreign arbitral award. Respondent Progress Bulk Carriers Ltd. ("PBC") opposes confirmation, citing the absence of personal and subject matter jurisdiction in this Court, as well as STX's failure to state a claim or to mitigate its damages. For the reasons set forth below, the petition for confirmation (the "Petition") is granted.
The facts are taken from the parties' submissions, including STX's Petition ("Pet."), PBC's Response ("Resp."), STX's Reply ("Rep."), the declarations submitted in connection with the submissions, and the exhibits attached thereto. The facts are undisputed unless otherwise noted.
STX is a South Korean corporation engaged in the international shipping trade. (Pet. ¶ 5.) In late October 2004, STX was retained to deliver a cargo of 30,000 metric tons of sulfur from the Persian Gulf to the Far East. (Decl. of Bethan Bradley, dated July 10, 2012, Doc. No. 3 ("Bradley Decl."), Ex. C ¶ 102.) As often occurs in the shipping industry, STX did not have a vessel capable of transporting the cargo. (Id. Ex. C ¶¶ 97, 98.) Accordingly, STX entered into negotiations with PBC, a chartering company based in the Bahamas, for use of a ship. (Id.; Pet. ¶ 6.) On November 15, 2004, after brief negotiations, STX and PBC entered into a fixture recapitulation agreement (the "Fixture Recap") for STX's use of the ship the M/V Kiti (the "Vessel"). (Bradley Decl. Ex. C ¶ 1; Pet. ¶ 13.) The Fixture Recap set out, inter alia, a full description of the Vessel, including a confirmation that the Vessel was "suitable for the carriage of sulphur [sic] in every respect." (Bradley Decl. Ex. A at 5, Ex. C ¶ 104.) It also incorporated by reference a prior charter that subjected any disputes between the parties to arbitration in London, with disputes arising out of the agreement to be governed by English law. (Id. Ex. A at 6, Ex. C ¶ 3; Pet. ¶¶ 14, 15.)
Shortly after entering the Fixture Recap, PBC informed STX that the Vessel was not equipped to carry the full load of sulfur, leaving STX unable to meet its obligation to ship the cargo. (Bradley Decl. Ex. C ¶¶ 110-13.) As a result, STX was unable to honor its shipping agreement. (Id. Ex. C ¶ 113.) Claiming breach of contract and seeking lost profits, STX initiated arbitration proceedings in London. (Id. Ex. C ¶¶ 4-9.) Though STX and PBC appointed arbitrators in December 2004, STX did not serve PBC with its claim until November 2008. (Id.) Following a contentious and prolonged arbitration, on September 19, 2011, an arbitral tribunal issued an award for STX in the amount of $293,540.21 plus interest. (Pet. ¶¶ 20-22.) On June 14, 2012, the tribunal also awarded STX its costs for the arbitration (collectively, the "Awards"). (Bradley Decl. Ex. D; Pet. ¶ 23.) STX submits that, as of July 12, 2012, the award for costs amounts to $190,745.03 plus interest. (Pet. ¶¶ 23-25.) STX thus seeks a total judgment against PBC in the amount of $484,285.24 plus interest. (Id. ¶ 25.)
PBC appealed this award, but it was affirmed by the High Court of Justice of the United Kingdom on March 15, 2012. The court also awarded costs to STX for the appeal. (Pet. ¶ 24.)
STX initiated this action on July 12, 2012, and filed an affidavit on August 8, 2012 attesting to its service of the Petition on PBC. (Doc. No. 6.) The Court ordered PBC to respond on August 22, 2012. (Doc. No. 8.) PBC filed its Response, submitted in the form of an Answer, on August 28, 2012, generally denying the allegations in the Petition and asserting five affirmative defenses. (Doc. No. 10.) The Petition was fully submitted on September 9, 2012 when STX filed its Reply. (Doc. No. 13.)
II. LEGAL STANDARD
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention"), as implemented by the Federal Arbitration Act ("FAA"), 9 U.S.C. § 201 et seq., permits a district court to enforce a foreign arbitral award when the party seeking to enforce the award files a petition to confirm within three years of the award's issue, id. § 207, and submits an original or certified copy of the arbitration agreement and award to the court, Linsen Intern. Ltd. v. Humpuss Sea Transport PTE LTD, No. 09 Civ. 10393 (GBD), 2011 WL 1795813 at *2 (S.D.N.Y. Apr. 29, 2011) (citing New York Convention art. IV(1)). Pursuant to the FAA, a district court's role in reviewing an award is "strictly limited and the showing required to avoid summary confirmance is high." Compagnie Noga D'Importation et D'Exportation, S.A. v. Russ. Fed'n, 361 F.3d 676, 683 (2d Cir. 2004) (internal quotation marks omitted). Indeed, the FAA directs that a court "shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention." 9 U.S.C. § 207. Further, the "party opposing enforcement of an arbitral award has the burden to prove that one of the seven defenses under the New York Convention applies." Encyclopaedia Universalis S.A. v. Encyclopaedia Britannica, Inc., 403 F.3d 85, 90 (2d Cir. 2005).
The defenses enumerated in the New York Convention are: (i) "the parties to the arbitration agreement lacked capacity or the agreement was not legally valid;" (ii) "proper notice of the appointment of the arbitrator or of the arbitration proceeding was not given;" (iii) the award "deals with a matter not submitted to arbitration or beyond the scope of the submission;" (iv) "the arbitral authority or procedure was not agreed to by the parties;" and (v) "the award was not yet binding or had been set aside or suspended in the enforcement forum." Monegasque De Reassurances S.A.M. v. Nak Naftogaz of Ukr., 311 F.3d 488, 494 (2d Cir. 2002). A court may also refuse to confirm an award if "[t]he subject matter of the difference is not capable of settlement by arbitration" or "recognition or enforcement of the award would be contrary to the public policy of [the forum where enforcement is sought]." N.Y. Conv., art. V.
STX initiated this action less than one year after the tribunal ordered the Awards; moreover, STX has submitted to this Court a certified copy of the Fixture Recap with the parties' agreement to arbitrate (Bradley Decl. Exs. A, B), as well as a certified copy of the Awards (id. Exs. C, D). Accordingly, the burden falls upon PBC to prove that enforcement would be improper. Significantly, PBC does not suggest that any of the grounds for declining confirmation listed in the Convention are applicable. Rather, PBC objects that (1) this Court lacks personal jurisdiction over PBC; (2) the Petition does not state a cause of action upon which relief can be granted; (3) there was insufficient process; (4) STX failed to properly mitigate damages; and (5) the Court lacks subject matter jurisdiction over the dispute. (Resp. ¶¶ 10-14.)
PBC's Response was submitted in the form of an Answer. However, in its Order directing PBC to respond to the Petition, the Court clearly stated that "a motion to confirm an arbitration 'should be treated akin to a motion for summary judgment,'" and that as such, PBC "shall respond" to the Petition. Accordingly, PBC's Response will be treated as such.
A. Personal Jurisdiction
A petition to confirm an arbitral award is "treated as akin to a motion for summary judgment." D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95, 109 (2d Cir. 2006). Accordingly, a petitioner must "establish that the undisputed facts in the petition and the accompanying record support personal jurisdiction by a preponderance of the evidence." Sonera Holding B.V. v. Cukurova Holding A.S., No. 11 Civ. 8909 (DLC), 2012 WL 3925853, at *2 (S.D.N.Y. Sept. 10, 2012). In New York, long-arm jurisdiction may be established over a foreign corporation "that is engaged in such a continuous and systematic course of 'doing business' in New York as to warrant a finding of its 'presence' in the state . . . even if the cause of action is unrelated to the defendant's New York activities." Jazini v. Nissan Motor Co., 148 F.3d 181, 184 (2d Cir. 1998) (citations and internal quotation marks omitted); see also N.Y. C.P.L.R. § 301. Additionally, a "non-resident corporation may be subject to jurisdiction, on a general or specific basis, depending on the contacts and actions of its agents." Ivan Visin Shipping, Ltd. v. Onego Shipping & Chartering, B.V., No. 08 Civ. 1239 (JSR), 2008 WL 839714, at *2 (S.D.N.Y. Mar. 31, 2008). Where an agent performs services that "go beyond mere solicitation and are sufficiently important to the foreign entity that the corporation itself would perform equivalent services if no agent were available," courts in New York have exercised general jurisdiction over the foreign entity. Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 95 (2d Cir. 2000).
STX argues that the Court has jurisdiction over PBC because PBC is listed as having an office in New York and has designated two New York companies to serve as its agents within the state, including as agents for service of process. (Rep. at 5-6.) PBC has attested to these facts in prior actions in this district. (See Decl. of John R. Keough, dated Sept. 19, 2012, Doc. No. 14 ("Keough Decl."), Exs. A, B.) For instance, in 2008, the President of Med Brokerage and Management, Corp. ("Med"), Ibrahim Mazman, asserted in an affirmation filed in this district that Med was a domestic New York business corporation hired by PBC to serve as its "worldwide managing agent," duties of which included negotiating contracts with PBC clients, purchasing supplies and services on PBC's behalf, accepting service, and overseeing "[s]ubstantially all of the activities involved in managing PBC's worldwide shipping business." (Id. Ex. A ¶¶ 4-5.) In another affirmation filed in that action, Peter Wolf, President of American Corporate Technical Services, Inc. ("ACTS"), stated that ACTS was a domestic New York business corporation hired by PBC as its "agent for service of process and to perform other services to establish a presence in New York for PBC." (Id. Ex. B ¶ 6.) ACTS also maintained a telephone number for PBC, listed under PBC's name. (Id. Ex. B ¶ 9.)
On the basis of these facts, Judge Crotty found that PBC "had continuous business contacts with New York both directly and via its managing agent." Far Eastern Shipping Co. v. Progress Bulk Carriers, Ltd., No. 07 Civ. 11375 (PAC), 2008 WL 2035788, at *2 (S.D.N.Y. Feb. 8, 2008). While four years have passed since this finding, STX has also submitted a current listing for PBC's phone number at ACTS's office (Keough Decl. Ex. C) and evidence that, as of 2011, PBC was still advertising Med as its general agent on its website (id. Ex. D). See Cantone & Co., Inc. v. Seafrigo, No. 07 Civ. 6602 (PKL), 2009 WL 210682, at *4 (S.D.N.Y. Jan. 27, 2009) (exercising personal jurisdiction over defendant based on defendant's internet advertisement of relationship with agent in that state). Moreover, PBC has offered no support for its objection to the exercise of personal jurisdiction or proof that these agency relationships have been altered, beyond the bald assertion that jurisdiction does not exist. (See Resp. ¶ 10.) Therefore, the Court finds that PBC has "continuous and systematic" contacts with New York sufficient to support jurisdiction.
Although the exercise of personal jurisdiction must comport with due process, it is generally settled that where jurisdiction is found under New York law, the requirements of due process are met. See D.H. Blair, 462 F.3d at 105. --------
PBC also contests jurisdiction on the grounds that STX did not properly serve it with process. However, this claim too must fail. Federal Rule of Civil Procedure 4 states that process may be served, among other means, by "delivering a copy of [the summons and complaint] to an agent authorized by appointment or by law to receive service of process." Fed. R. Civ. P. Rule 4(e)(2)(C). Further, a process server's sworn affidavit establishes a presumption of service. Old Republic Ins. Co. v. Pac. Fin. Servs. of Am., Inc., 301 F.3d 54, 57 (2d Cir. 2002). While "[a] defendant's sworn denial of receipt of service . . . rebuts [that] presumption . . . and necessitates an evidentiary hearing, . . . no evidentiary hearing is required where the defendant fails to swear to specific facts to rebut the statements in the process server's affidavits." Id. at 57-58 (citation and internal quotation marks omitted).
STX has filed an affidavit of service affirming that the Petition was served on both Med and ACTS. (Doc. No. 6.) PBC provides no support for its claim beyond its assertion that "Petitioner has improperly and/or insufficiently served process upon the Answering Respondent." (Resp. ¶ 12.) Without any "specific facts" rebutting STX's affidavit, the Court has little difficulty determining that PBC's objection is without merit. Accordingly, the Court finds that it has personal jurisdiction over PBC.
B. Subject Matter Jurisdiction
PBC's objection that the Court lacks subject matter jurisdiction merits minimal attention. The Convention governs foreign arbitral awards arising out of commercial agreements. 9 U.S.C. § 202. Pursuant to the FAA, district courts have original jurisdiction over actions falling under the Convention. Id. § 203. The Awards here were issued by an arbitral tribunal in London, in accordance with an arbitration agreement between a South Korean and a Bahamian corporation. Accordingly, the Court finds that it has subject matter jurisdiction to entertain this dispute.
C. PBC's Remaining Defenses
PBC's objections that STX failed to state a cause of action and mitigate its damages are similarly unavailing. As stated above, "[g]iven the strong public policy in favor of international arbitration, . . . review of arbitral awards under the New York Convention is 'very limited . . . in order to avoid undermining the twin goals of arbitration, namely, settling disputes efficiently and avoiding long and expensive litigation.'" Encyclopaedia Universalis S.A., 403 F.3d at 90 (quoting Yusuf Ahmed Alghanim & Sons v. Toys "R" Us, Inc., 126 F.3d 15, 23 (2d Cir. 1997)) (citation omitted). Specifically, courts are limited to determining whether a defense enumerated in the Convention bars enforcement of an award. Id. Here, neither defense asserted by PBC is listed in the Convention. Instead, PBC is impermissibly attempting to relitigate the underlying claim. Thus, the Court finds these objections to be without merit.
The Court finds that it has personal jurisdiction over PBC and subject matter jurisdiction over this action. Further, the Court concludes that none of the seven defenses under the New York Convention apply in this matter. Accordingly, STX's Petition is GRANTED. STX shall submit a proposed judgment including a calculation of interest no later than March 29, 2013. SO ORDERED
RICHARD J. SULLIVAN
United States District Judge Dated: New York, New York
March 14, 2013
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Petitioner is represented by George G. Cornell and John R Keough, III of Clyde & Co. US LLP, 405 Lexington Avenue, New York, New York 10174.
Respondent is represented by Timothy G. Griffin, 77 Pondfield Road, Bronxville, New York 10708.