Figueiredo Ferraz E Engenharia De Projecto Ltda v. Republic of Peru, et al., Dkt. Nos. 09-3925-cv, 10-1612-cv (2d Cir. 2011), addresses a key issue in international practice, especially attempts to enforce international arbitral awards in the context of motions to dismiss on forum non conveniens grounds. (For a general discussion of the forum non conveniens doctrine, see our e-book, International Practice: Topics and Trends.)
The plaintiff sought to confirm an international arbitral award in the Southern District of New York. The District Court denied the motion to dismiss, which was predicated on the forum non conveniens doctrine. Application of the doctrine in turn rested on the existence of a Peruvian statute “that limits the amount of money that an agency of the Peruvian government may pay annually to satsify a judgment”. (The limit is 3% of the agency’s budget.) The award was for over $21 million; the cap caused a limit on payment so that only $1.4 million had been paid on the award. Confirmation of the award was sought under the New York Convention and the Panama Convention. The District Court’s denial of the motion to dismiss was appealed as an interlocutory order, which the Second Circuit granted. The Circuit invited the views of the United States, since “aspects of the appeal . . . might have implications for the conduct of the foreign relations of the United States”.
On appeal, the Circuit did not address the issue of subject matter jurisdiction first, relying on the Circuit’s practice from time to time of “exercising discretion to consider an FNC dismissal without first adjudicating issues of subject matter jurisdiction”.
On the issue of forum non conveniens dismissal, the Court of Appeals noted that the non-U.S. forum did not have to provide identical relief to that of a U.S. court for the non-U.S. jurisdiction to be adequate. Indeed, in a case in which the author of this blog was counsel, the Second Circuit affirmed an FNC dismissal of a RICO claim even where the non-U.S. jurisdiction did not have anything like the RICO statute (see the blog discussion here). The Circuit “agreed with the Appellants that the cap statute is a highly significant public factor warranting FNC dismissal”. The Court of Appeals did not discuss whether the same relief might have been available if the U.S. court had applied Peruvian law on public policy grounds in the confirmation or enforcement proceeding.
The Circuit granted an FNC dismissal on the condition that the defendant waive any applicable statute of limitations defense, and “subject to the further condition that if, for any reason, the courts of Peru decline to entertain a suit to enforce the Award, this lawsuit may be promptly reinstated in the District Court”.
Judge Lynch dissented, including by observing that the concern over “escap[ing] Peruvian judgment-enforcement limitations designed to protect the budget of a developing country” was simply “not one that sounds in the interests assessed by a forum non conveniens ruling”.