329 F.3d 64 (2nd Cir. 2003), 01-7488, Pollux Holding Ltd. v. Chase Manhattan Bank

Docket Nº:01-7488
Citation:329 F.3d 64
Party Name:Pollux Holding Ltd. v. Chase Manhattan Bank
Case Date:May 01, 2003
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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329 F.3d 64 (2nd Cir. 2003)

POLLUX HOLDING LTD., Plaintiff-Appellant,

v.

THE CHASE MANHATTAN BANK, Defendant-Appellee.

Springwell Navigation Corporation, Plaintiff-Appellant,

v.

The Chase Manhattan Bank, Defendant-Appellee.

No. 01-7488, 01-7492.

United States Court of Appeals, Second Circuit

May 1, 2003

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Mark S. Arisohn, New York, New York (Barry Michael Okun, Goodkind Labaton Rudoff & Sucharow LLP, New York, New York, of counsel), for Plaintiff-Appellant Pollux Holding Ltd.

Erik S. Jaffe, Erik S. Jaffee, P.C., Washington, D.C. (Stephen D. Hoffman, Siller Wilk LLP, New York, New York, of counsel), for Plaintiff-Appellant Springwell Navigation Corp.

Thomas C. Rice, New York, New York (Jennifer N. Colao, Laura W. Sawyer, Hillary C. Mintz, Simpson Thacher & Bartlett, New York, New York; Michael A. O'Connor, J.P. Morgan Chase & Co., Legal Department, New York, New York, of counsel), for Defendant-Appellee The Chase Manhattan Bank.

Before: WALKER, Chief Judge, CARDAMONE, and STRAUB, Circuit Judges.

CARDAMONE, Circuit Judge.

On this appeal we revisit the doctrine of forum non conveniens. That doctrine affords a trial court discretion in a case over which it has jurisdiction to decline to exercise it, whenever it appears that such case may be more appropriately tried in another forum, either for the convenience of the parties or to serve the ends of justice. The focus of any forum non conveniens inquiry, as the term itself suggests, is to ensure that the place where a trial is held is convenient, that is, that the forum fits the needs and is suitable to the circumstances of the case.

Plaintiff Pollux Holding Ltd. (Pollux) and plaintiff Springwell Navigation Corporation (Springwell) (collectively plaintiffs or appellants), are Liberian corporations that serve as personal investment vehicles for wealthy Greek individuals. Each filed a separate complaint against The Chase Manhattan Bank (Chase or bank) in the United States District Court for the Southern District of New York in December 1999 before Judge Kimba M. Wood. The complaints allege numerous causes of action--including negligent misrepresentation, fraud, breach of contract, breach of fiduciary duty, negligence, negligent supervision, and violations of English statutory law--all of which are connected to losses stemming from plaintiffs' investments in derivative securities sold by

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Chase. Judge Wood granted defendant Chase's motion to dismiss both complaints on the grounds of forum non conveniens, concluding that England was a more appropriate forum. Plaintiffs filed timely appeals that we heard in tandem.

BACKGROUND

A. The Parties

Pollux and Springwell are both organized under the laws of Liberia and each maintains its principal place of business in Greece. Both plaintiffs are personal investment companies serving wealthy Greek nationals engaged in the shipping business; Pollux for Diamantis Diamantides, and Springwell for Adam and Spiros Polemis.

Chase is a New York banking corporation headquartered in New York City, but with numerous overseas branches through which it conducts business. One such branch is located in London (Chase London). Chase is also affiliated with a number of banking companies including: Chase Investment Bank Limited (Chase Limited), a United Kingdom (U.K.) affiliate engaged in emerging market sales; Chase Manhattan International Limited (Chase International Limited), also a U.K. affiliate that took over managing emerging markets-based trading from Chase Limited in 1993; Chase Manhattan Securities (C.I.) Limited (Chase Securities), a Jersey, Channel Islands affiliate; and Chase Manhattan Bank International (Chase International), a bank organized under the laws of Russia. Chase also operates Private Bank, headquartered in New York, with a branch in London.

Both Diamantides and the Polemises have been banking with Chase for many years. In 1990 Diamantides established a relationship with Chase's Private Bank in London. Diamantides also opened an account with Chase London. The Polemis family, which has been in the shipping business for more than 100 years, has been a client of Chase's Global Shipping Group for almost 50 years. When Springwell was established by Adam and Spiros Polemis in 1986, it also established a banking relationship with Chase London. The Polemises also have a relationship with Chase's Private Bank in London that began in the late 1980s.

In the early 1990s, plaintiffs began to invest in emerging market securities. These emerging market investment products were sold to them by Justin Atkinson, a London-based salesperson who was employed first at Chase Limited and, later, at Chase International Limited. Plaintiffs initially focused on Latin American investments, but subsequently expanded their portfolio to include investments in Russian securities.

B. The Notes

In 1996 Chase International Limited developed a complex derivative instrument (Notes) based on Gosudarstvenniye Kratkosrochniye Beskuponniye Obligatsii (GKOs), short-term, zero coupon, rouble denominated bonds issued by the Russian Ministry of Finance. The Notes, which were issued by defendant's affiliate Chase Securities, were linked to the performance of a particular issue of GKOs and incorporated forward foreign exchange contracts that hedged against devaluation of the rouble. Plaintiffs allege these GKOs were a pyramid scheme where the funds from the sale of new Notes were used to redeem those that matured. Chase Securities did not purchase the underlying GKOs itself; instead, investments in GKOs were made by Chase International Limited which had a special account with Chase International and other Russian banks that allowed it to purchase GKOs as a foreign investor.

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Pollux purchased 17 Notes between April 1997 and April 1998 and Springwell purchased 42 Notes between April 1996 and July 1998. Initially plaintiffs purchased the Notes outright, but later financed 60 to 70 percent of the purchase price--including all of the Notes at issue in this litigation--through Chase London. In connection with this financing plaintiffs executed repurchase agreements, under the terms of which Pollux and Springwell bought the Notes, but immediately resold them to Chase London. The agreements further provided that plaintiffs would repurchase the Notes at maturity for the same price paid for them by Chase London, plus a finance charge. After purchasing the Notes in London, plaintiffs transferred the purchase funds to Chase Securities' account at Chase in New York. The purchase confirmations and related documentation for the Notes were generated by the New York bank and New York officials were involved in various aspects of the sales of the Notes.

Both the Notes themselves and the repurchase agreements contain language relevant to issues of choice of law and jurisdiction. The Notes elect both English law and exclusive English jurisdiction, stating

This Note shall be governed by, and construed and interpreted in accordance with, the laws of England. Any legal action or proceeding with respect to this Note ... may be instituted exclusively in the English courts and, by execution and delivery of this Note, the parties hereto irrevocably submit to the exclusive jurisdiction of such court in any such action or proceeding ...

The confirmation documents generated for each Note contain a summary "terms and conditions" sheet that specifies English law as governing law, but does not address forum selection. The repurchase agreements designate English law as controlling and provide for the parties' consent to submit to English courts' jurisdiction, but not to the exclusion of courts "of any other country of competent jurisdiction."

Plaintiffs' initial investments in the Notes were profitable, yielding returns of 11 to 14 percent for Pollux and, 15 percent on average, for Springwell. In August 1998 the GKO market collapsed because the Russian government defaulted on its internal debt, devalued the rouble, and restricted the exchange of roubles into United States dollars. Pollux's losses on the devalued Notes exceed $40 million; Springwell lost almost $88 million. Following this failure, defendant attempted to negotiate a restructuring of the transactions and a settlement with plaintiffs through various personal meetings in London, and through facsimile messages and telephone conversations.

C. Prior Legal Proceedings

When these efforts proved unsuccessful, plaintiffs on December 7, 1999 filed complaints against Chase. Their claims fall into two categories: (1) allegations and causes of action involving the malfeasance of the bank and its agents in recommending and selling the Notes, and (2) the bank's alleged failure to manage the Notes and related hedge contracts, after the collapse, in a manner designed to minimize plaintiffs' losses. Plaintiffs seek damages, declaratory relief, an accounting and rescission of the repurchase agreements.

Defendant moved to dismiss on the grounds of forum non conveniens asserting that England is a more convenient forum for this litigation. Plaintiffs, in response, moved for discovery on issues related to defendant's motion to dismiss, but that motion was denied. In a subsequent judgment entered on April 5, 2001, the district court granted defendant's motion

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to dismiss both complaints on the grounds of forum non conveniens.

On appeal plaintiffs urge that the district court erred by not giving their choice of forum sufficient deference, and by improperly weighing the private and public interest factors that are typically considered in forum non conveniens cases. Inasmuch as plaintiffs have misconstrued our recent forum non conveniens decisions, and have failed to identify any clear error in the trial court's balancing of the various convenience factors,...

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155 practice notes
  • 443 F.Supp.2d 474 (S.D.N.Y. 2006), 05 Civ. 7947, Gilstrap v. Radianz Ltd.
    • United States
    • Federal Cases United States District Courts 2nd Circuit Southern District of New York
    • July 26, 2006
    ...the case possess bona fide connections to, and convenience factors favor, that forum." Pollux Holding Ltd. v. Chase Manhattan Bank, 329 F.3d 64, 74 (2d Cir.2003), cert. denied, 540 U.S. 1149, 124 S.Ct. 1145, 157 L.Ed.2d 1041 (2004). "[W]here the circumstances indicate that the par......
  • 525 B.R. 871 (Bkrtcy.S.D.N.Y. 2015), 08-99000 (SMB), Picard v. Estate (Succession) of Igoin
    • United States
    • Federal Cases United States Bankruptcy Courts Second Circuit
    • February 13, 2015
    ...litigation of the subject matter of the dispute." Norex, 416 F.3d at 157 (quoting Pollux Holding Ltd. v. Chase Manhattan Bank, 329 F.3d 64, 75 (2d Cir. 2003)). Laurence and Emilie are amenable to the service of process in France and have consented to the jurisdiction of a French court.......
  • 688 F.Supp.2d 303 (S.D.N.Y. 2010), 09 Civ. 7058(VM), Terra Securities ASA Konkursbo v. Citigroup, Inc.
    • United States
    • Federal Cases United States District Courts 2nd Circuit Southern District of New York
    • February 17, 2010
    ...as well as whether forum-shopping reasons may have motivated the plaintiff's choice. See Pollux Holding Ltd. v. The Chase Manhattan Bank, 329 F.3d 64, 71 (2d Cir.2003) (" The greater the plaintiff's or the lawsuit's bona fide connection to the U.S., the more difficult it will be for th......
  • 710 F.Supp.2d 328 (S.D.N.Y. 2008), 06 Civ. 7839 (PKL), Niv v. Hilton Hotels Corp.
    • United States
    • Federal Cases United States District Courts 2nd Circuit Southern District of New York
    • November 10, 2008
    ...is a much less reliable proxy for convenience than if a plaintiff chooses his own home forum. Pollux Holding Ltd. v. Chase Manhattan Bank, 329 F.3d 64, 74 (2d Cir.2003). " Bearing in mind that litigants rarely are concerned with promoting their adversary's convenience at their own expe......
  • Free signup to view additional results
151 cases
  • 443 F.Supp.2d 474 (S.D.N.Y. 2006), 05 Civ. 7947, Gilstrap v. Radianz Ltd.
    • United States
    • Federal Cases United States District Courts 2nd Circuit Southern District of New York
    • July 26, 2006
    ...the case possess bona fide connections to, and convenience factors favor, that forum." Pollux Holding Ltd. v. Chase Manhattan Bank, 329 F.3d 64, 74 (2d Cir.2003), cert. denied, 540 U.S. 1149, 124 S.Ct. 1145, 157 L.Ed.2d 1041 (2004). "[W]here the circumstances indicate that the par......
  • 525 B.R. 871 (Bkrtcy.S.D.N.Y. 2015), 08-99000 (SMB), Picard v. Estate (Succession) of Igoin
    • United States
    • Federal Cases United States Bankruptcy Courts Second Circuit
    • February 13, 2015
    ...litigation of the subject matter of the dispute." Norex, 416 F.3d at 157 (quoting Pollux Holding Ltd. v. Chase Manhattan Bank, 329 F.3d 64, 75 (2d Cir. 2003)). Laurence and Emilie are amenable to the service of process in France and have consented to the jurisdiction of a French court.......
  • 688 F.Supp.2d 303 (S.D.N.Y. 2010), 09 Civ. 7058(VM), Terra Securities ASA Konkursbo v. Citigroup, Inc.
    • United States
    • Federal Cases United States District Courts 2nd Circuit Southern District of New York
    • February 17, 2010
    ...as well as whether forum-shopping reasons may have motivated the plaintiff's choice. See Pollux Holding Ltd. v. The Chase Manhattan Bank, 329 F.3d 64, 71 (2d Cir.2003) (" The greater the plaintiff's or the lawsuit's bona fide connection to the U.S., the more difficult it will be for th......
  • 710 F.Supp.2d 328 (S.D.N.Y. 2008), 06 Civ. 7839 (PKL), Niv v. Hilton Hotels Corp.
    • United States
    • Federal Cases United States District Courts 2nd Circuit Southern District of New York
    • November 10, 2008
    ...is a much less reliable proxy for convenience than if a plaintiff chooses his own home forum. Pollux Holding Ltd. v. Chase Manhattan Bank, 329 F.3d 64, 74 (2d Cir.2003). " Bearing in mind that litigants rarely are concerned with promoting their adversary's convenience at their own expe......
  • Free signup to view additional results
4 books & journal articles
  • Forum Non Conveniens and Parallel Foreign Proceedings
    • United States
    • The Foreign Sovereign Immunities Act Deskbook Selecting a proper court
    • May 23, 2013
    ...terms no less favorable than those applicable to nationals of the court’s country”); but see Pollux Holding, Ltd. v. Chase Manhattan Bank, 329 F.3d 64, 73 (2d Cir. 2003) (distinguishing U.S.-Liberia treaty from treaties providing “equal access” to foreign nationals; holding that plaintifs’ ......
  • The forum non conveniens motion and the death of the moth: a defense perspective in the post-Sinochem era.
    • United States
    • Albany Law Review Vol. 72 Nbr. 1, January 2009
    • January 1, 2009
    ...a dismissal that will ultimately result in the plaintiff not being able to seek relief. (87) Pollux Holding Ltd. v. Chase Manhattan Bank, 329 F.3d 64, 67, 70 (2d Cir. 2003). (88) Norex Petroleum Ltd. v. Access Indus., Inc., 416 F.3d 146, 153 (2d Cir. 2005). (89) Id. (90) Id. (91) See Aguind......
  • Parochial procedure.
    • United States
    • Stanford Law Review Vol. 69 Nbr. 4, April 2017
    • April 1, 2017
    ...Galustian v. Peter, 591 F.3d 724, 732 (4th Cir. 2010) (raising the same observation). But see Pollux Holding Ltd. v. Chase Manhattan Bank, 329 F.3d 64, 74 (2d Cir. 2003) (declining to give substantial deference to the plaintiffs' choice of the defendant's home forum). (265.) Compare DiFeder......
  • Litigation isolationism.
    • United States
    • Stanford Law Review Vol. 67 Nbr. 5, May - May 2015
    • May 1, 2015
    ...169; Whytock, supra note 28, at 503. (87.) Whytock, supra note 28, at 503. (88.) See, e.g., Pollux Holding Ltd. v. Chase Manhattan Bank, 329 F.3d 64, 67-68, 71, 73-74 (2d Cir. 2003); Aguinda v. Texaco, Inc., 303 F.3d 470, 480 (2d Cir. 2002); Can v. MD Helicopters, Inc., No. 1 CA-CV 10-0367,......