We have posted on the meanderings of the Norex case in federal court (e.g., here). After dismissal from federal court, Norex sued in state court. Norex Petroleum Ltd. v. Leonard Blavatnik, et al., Index No. 650591/11 (Sup. Ct. N.Y. County 2012).
In a decision that addresses several international litigation issues, the trial court dismissed at least one major action between the parties. The Court relied on the statute of limitations as imposed by virtue of New York’s Borrowing Statute. A brief reminder of the power of that statute is warranted. See the general discussion of borrowing statutes in our e-book, International Practice: Topics and Trends.
In the Norex case, Norex, though a Cyprus entity, has in principal place of business in Calgary, Alberta, Canada. The gravamen of the complaint related to alleged misappropriation of Norex’s majority interest in oil fields in Russia that are owned by Yugraneft, a non-party to the suit. The defendant in the case, BP, allegedly took control (through a joint venture) of the oil assets that Norex claims were taken from it.
In moving to dismiss on statute of limitations grounds, Defendants relied on CPLR Section 202, which provides as follows:
CPLR § 202 Cause of action accruing without the state
An action based upon a cause of action accruing without the state cannot be commenced after the expiration of the time limited by the laws of either the state or the place without the state where the cause of action accrued, except that where the cause of action accrued in favor of a resident of the state the time limited by the laws of the state shall apply.
Because Norex was not a New York resident, the Court needed to determine where the cause of action accrued. Finding that the cause of action accrued in Canada, “where the damages were felt”, the Court applied the Alberta two-year statute of limitations in tort cases. On this analysis the action in state court was time-barred.
The tricky part of the analysis, however, was whether the statute of limitations had been tolled. The federal action brought by Norex was, it claimed, timely filed even under a two-year statute. And Norex relied on CPLR 205(a), which provides in pertinent part:
New action by plaintiff. If an action is timely commenced and is terminated in any other manner than by a voluntary discontinuance, a failure to obtain personal jurisdiction over the defendant, a dismissal of the complaint for neglect to prosecute the action, or a final judgment upon the merits, the plaintiff, or, if the plaintiff dies, and the cause of action survives, his or her executor or administrator, may commence a new action upon the same transaction or occurrence or series of transactions or occurrences within six months after the termination provided that the new action would have been timely commenced at the time of commencement of the prior action and that service upon defendant is effected within such six-month period.
The state action was commenced within six months of the dismissal of the Norex federal action. However, the Court found that there was no similar tolling provision in the Canadian statutory scheme. The Court ruled that the fact that the Alberta law was “substantive” and not “procedural” didn’t matter; the Borrowing Statute required reliance on that non-New York law in any case.
Finally, the Court considered (arguendo) and rejected Norex’s reliance on 28 U.S.C. Sec 1367(d), a federal statute that provides:
d) The period of limitations for any claim asserted under subsection (a), and for any other claim in the same action that is voluntarily dismissed at the same time as or after the dismissal of the claim under subsection (a), shall be tolled while the claim is pending and for a period of 30 days after it is dismissed unless State law provides for a longer tolling period.
The Court determined that this federal statute was binding on it. The Court however also found that New York’s six-month tolling provision, being longer than the federal 30-day, meant that the federal statute didn’t apply. And “State law”, the Court found based on a definition in Section 1367(e), meant only states of the U.S., not a non-U.S. jurisdiction.