Cargill Intern. S.A. v. M/T Pavel Dybenko, No. 960

CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)
Writing for the CourtOAKES
Citation991 F.2d 1012
Decision Date19 April 1993
Docket NumberD,No. 960
PartiesCARGILL INTERNATIONAL S.A., and Cargill, B.V., Plaintiffs-Appellants, v. M/T PAVEL DYBENKO, her engines, tackle, etc., in rem; Novorossiysk Shipping Co., in personam, Defendants-Appellees. ocket 92-7876.

Page 1012

991 F.2d 1012
1994 A.M.C. 2258
CARGILL INTERNATIONAL S.A., and Cargill, B.V., Plaintiffs-Appellants,
v.
M/T PAVEL DYBENKO, her engines, tackle, etc., in rem;
Novorossiysk Shipping Co., in personam,
Defendants-Appellees.
No. 960, Docket 92-7876.
United States Court of Appeals,
Second Circuit.
Argued Feb. 17, 1993.
Decided April 19, 1993.

Page 1014

Caspar F. Ewig, New York City (Frances C. Peters, Hill, Rivkins, Loesberg, O'Brien, Mulroy & Hayden, of counsel), for plaintiffs-appellants.

George B. Freehill, New York City (Freehill, Hogan & Mahar, of counsel), for defendant-appellee Novorossiysk Shipping Co.

Before: OAKES, ALTIMARI and MAHONEY, Circuit Judges.

OAKES, Circuit Judge:

Plaintiff-Appellant, Cargill B.V. ("CBV"), appeals from the grant of summary judgment by the United States District Court for the Southern District of New York, Charles E. Stewart, Jr., Judge, in favor of the defendant, Novorossiysk Shipping Company ("Novorossiysk"), denying plaintiffs' request to compel Novorossiysk to arbitrate in London. 1 Cargill Int'l S.A. v. M/T PAVEL DYBENKO, No. 90 Civ. 3176, 1992 WL 42194, 1992 U.S.Dist.LEXIS 2329 (S.D.N.Y. Feb. 26, 1992). The district court found that Novorossiysk was a foreign sovereign and that CBV had failed to establish jurisdiction under the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1602-1611 (1988 & Supp. III 1991) ("FSIA"). For the reasons that follow, we reverse and remand.

BACKGROUND

On June 14, 1988, CBV, a Dutch corporation with its principal offices in Amsterdam, bought 7,000 metric tons of crude Argentine degummed soybean oil from CISA, a company incorporated under the laws of the Netherlands Antilles and based in Geneva, Switzerland. Subsequently, CISA entered into a Charter Party with Novorossiysk, an entity wholly owned by the former Soviet Union, to transport the oil from Argentina and Brazil to the Netherlands aboard Novorossiysk's ship, the M/T Pavel Dybenko. 2

Under Clause 24, in Part II of the Charter Party, any dispute arising out of the Charter Party is to be submitted to arbitration in either New York or London, "whichever place is specified in Part I of this charter pursuant to the laws relating to arbitration there in force." Clause K of Part I specifies London as the site for arbitration proceedings. In addition, Clause 28 of the Special Provisions appended to the Charter Party provides that the bills of lading should "incorporate particulars of Charter Party i.e. ...--Arbitration in London should be stated in the Bill of Lading."

On July 16-18, 1988, the M/T Pavel Dybenko was loaded with 9,100 metric tons of degummed soyabean oil in San Lorenzo, Argentina, and on July 23, 1988, with 5,750 metric tons in Rio Grande, Brazil. Pursuant to the terms of the Charter Party, CISA, through its Argentine agents/shippers, had the bills of lading presented to the master of the Pavel Dybenko for his signature. Despite Clause 28 of the Charter Party, the bills of lading failed to "incorporate particulars" of the Charter Party, including the arbitration provision. CBV is the receiver and holder of bills of lading issued in connection with this cargo.

Page 1015

After arrival in Amsterdam, CBV subjected the cargo to chemical analysis and allegedly found it to have been contaminated with hydrocarbons during the course of the voyage. As a result CBV claimed monetary damages in the amount of $920,000. CBV presented its claim to the West of England Shipowners Mutual Insurance Association ("West of England"). 3 As security for the claim, West of England guaranteed by letter that it would appear and pay any judgment rendered by a Dutch court having jurisdiction in this case. From July, 1989 to April, 1990, the parties' insurance representatives entered into three agreements extending CISA and CBV's time to commence legal proceedings against the defendants. The last extension granted by defendants was to expire on May 9, 1990.

On May 7, 1990, the plaintiffs sought an additional three-month extension. They telexed their request to Novorossiysk's headquarters in Moscow. Apparently the request arrived on a state holiday and received no response. As a result, on May 9, 1990, CISA designated its arbitrator in London under the terms of the Charter Party. Both CBV and CISA also brought this suit against the defendants in order to protect whatever rights they might have in the United States, the only forum in which the statute of limitations had not yet expired. No other fora remained open to them at the time. The complaint sought an order to compel Novorossiysk to arbitrate in London. As noted above, CISA has agreed to stay its claims pending the outcome of its arbitration in London.

In CBV's suit before the district court, it alleged jurisdiction based on three exceptions to the FSIA: the waiver exception, the arbitration exception, and the maritime lien exception, found respectively in 28 U.S.C. §§ 1605(a)(1), 1605(a)(6)(B), and 1605(b) (1988 & Supp. III 1991). The district court found none of the exceptions to be applicable. First, the court found no implicit or explicit waiver by Novorossiysk of its sovereign immunity due to its agreement in the Charter Party to arbitrate disputes in London. Second, the court noted that the bills of lading contained no arbitration clause and thus the arbitration exception did not apply. The court refused to consider CBV's argument that it was a third-party beneficiary of the arbitration clause in the Charter Party. According to the court, it required a "basis for subject matter jurisdiction" in order to reformulate the contract between CBV and Novorossiysk. Third, the court found that the plaintiffs had met none of the requirements to enforce a maritime lien.

Because a court has jurisdiction to determine its own jurisdiction, we reverse and remand to the district court for a determination of whether CBV can prove its third party beneficiary status and thus establish subject matter jurisdiction.

DISCUSSION

CBV, having dropped its maritime lien argument, maintains that Novorossiysk has waived its immunity on two grounds listed in the FSIA. CBV also argues for the first time that Novorossiysk is no longer a sovereign entity and should be denied immunity on that ground. We address these arguments below, beginning with the newest one.

A. Novorossiysk's Status as a Sovereign Entity

On appeal, CBV argues that Novorossiysk is no longer immune to suit as a foreign sovereign. According to CBV, the defendant has begun the process of privatization and therefore should no longer be considered a sovereign entity. We reject this argument.

Initially, we note that although there is a controversy over whether subject matter jurisdiction is measured from the time of the acts in question or from time of trial, compare, e.g., Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d 445, 450 (6th Cir.1988) ("determination of whether a party is subject to the court's jurisdiction ... should be based upon a party's status

Page 1016

at the time the act complained of occurred") cert. dismissed, --- U.S. ----, 112 S.Ct. 1657, 118 L.Ed.2d 317 (1992), with, e.g., Wolf v. Banco Nacional de Mexico, S.A., 739 F.2d 1458, 1460 (9th Cir.1984) (banks nationalized after acts occurred but before suit), cert. denied, 469 U.S. 1108, 105 S.Ct. 784, 83 L.Ed.2d 778 (1985), we do not believe it can be found retroactively from the time of appeal.

CBV argues that the policy behind the FSIA is inapplicable in this case. As it notes, the FSIA was enacted to address "the potential sensitivity of actions against foreign states." H.R.Rep. No. 1487, 94th Cong., 2d Sess. 32 (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6631 ("House Report"). Thus, it aimed "to facilitate and depoliticize litigation against foreign states and to minimize irritations in foreign relations arising out of such litigation." Id. at 45, reprinted in 1976 U.S.C.C.A.N. at 6634 (executive communication from Departments of State and Justice enclosing draft bill for consideration of the House). We disagree with CBV that "sensitivity" is no longer an issue. Indeed, an even greater hesitancy may be necessary in situations such as these where nationalized companies are in the process of being privatized. Particularly in the case of the former Communist world, American interests are strongly implicated in seeing that the transition to private enterprise goes smoothly. Moreover, the foreign state may remain financially responsible for any judgments won against a former state-owned entity, especially where the acts at issue occurred when the entity was still under government control.

In any case, according to the documents submitted by CBV, while Russia has approved Novorossiysk's plan to privatize, Novorossiysk has not sold shares or taken any other steps toward privatization. Even after the first shares are distributed, nearly half of the shares will remain with the Russian State Property Fund for a period of three years. We consider an entity at such an early stage of privatization to be sovereign under the FSIA.

B. Exceptions to Foreign Sovereign Immunity

The statutory provisions governing subject...

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  • In re Cinar Corp. Securities Litigation, No. MDL 00-1362(RJD).
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • February 25, 2002
    ...take into account "the pleadings and any evidence before it, such as affidavits." Id. (quoting Cargill Int'l S.A. v. M/T PAVEL DYBENKO, 991 F.2d 1012, 1019 (2d A. International Comity6 Defendants argue that all of the actions before the Court are inherently Canadian disputes and should be d......
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    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Connecticut)
    • February 14, 2006
    ...Therefore, a court must "look to the substance of the allegations to determine jurisdiction." Cargill Ina S.A. v. MIT Pavel Dybenko, 991 F.2d 1012, 1019 (2d As stated previously, Defendant is moving to dismiss Relator's Second Amended Complaint pursuant to Rules 9(b), 12(b)(1), 12(b)(6) and......
  • Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., No. CIV.01-08541 SVW.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
    • January 9, 2003
    ...jurisdictional issues to look beyond the pleadings to any evidence before the Court. Cargill Intern. S.A. v. MIT Pavel Dybenko, 991 F.2d 1012, 1019 (2d In the absence of a traditional basis for asserting jurisdiction (i.e., physical presence, domicile or consent), due process requires that ......
  • Murphy ex rel. Estate of Payne v. U.S., No. 3:03CV500 (MRK).
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Connecticut)
    • September 24, 2004
    ..."the district court must look at the substance of the allegations to determine jurisdiction." Cargill Int'l S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1019 (2d The first question this Court must resolve is whether it has subject matter jurisdiction over Plaintiffs' claims. Mem. in Supp. of M......
  • Request a trial to view additional results
173 cases
  • In re Cinar Corp. Securities Litigation, No. MDL 00-1362(RJD).
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • February 25, 2002
    ...take into account "the pleadings and any evidence before it, such as affidavits." Id. (quoting Cargill Int'l S.A. v. M/T PAVEL DYBENKO, 991 F.2d 1012, 1019 (2d A. International Comity6 Defendants argue that all of the actions before the Court are inherently Canadian disputes and should be d......
  • U.S. ex rel. Smith v. Yale University, No. 3:00CV1359 (PCD).
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Connecticut)
    • February 14, 2006
    ...Therefore, a court must "look to the substance of the allegations to determine jurisdiction." Cargill Ina S.A. v. MIT Pavel Dybenko, 991 F.2d 1012, 1019 (2d As stated previously, Defendant is moving to dismiss Relator's Second Amended Complaint pursuant to Rules 9(b), 12(b)(1), 12(b)(6) and......
  • Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., No. CIV.01-08541 SVW.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
    • January 9, 2003
    ...jurisdictional issues to look beyond the pleadings to any evidence before the Court. Cargill Intern. S.A. v. MIT Pavel Dybenko, 991 F.2d 1012, 1019 (2d In the absence of a traditional basis for asserting jurisdiction (i.e., physical presence, domicile or consent), due process requires that ......
  • Murphy ex rel. Estate of Payne v. U.S., No. 3:03CV500 (MRK).
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Connecticut)
    • September 24, 2004
    ..."the district court must look at the substance of the allegations to determine jurisdiction." Cargill Int'l S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1019 (2d The first question this Court must resolve is whether it has subject matter jurisdiction over Plaintiffs' claims. Mem. in Supp. of M......
  • Request a trial to view additional results

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