Seetransport Wiking Trader v. Navimpex Centrala

• Decision Date: 02 April 1992
• Docket Number: No. 88 Civ. 2132 (VLB).,88 Civ. 2132 (VLB).
• Citation: 793 F. Supp. 444
• Parties: SEETRANSPORT WIKING TRADER SCHIFFFARHTSGESELLSCHAFT MBH & CO., KOMMANDITGESELLSCHAFT, Plaintiff, v. NAVIMPEX CENTRALA NAVALA, Defendant.
• Court: U.S. District Court — Southern District of New York

793 F. Supp. 444

SEETRANSPORT WIKING TRADER SCHIFFFARHTSGESELLSCHAFT MBH & CO., KOMMANDITGESELLSCHAFT, Plaintiff, v. NAVIMPEX CENTRALA NAVALA, Defendant.

No. 88 Civ. 2132 (VLB).

United States District Court, S.D. New York.

April 2, 1992.

John J. Devine, Jr., Poles, Tublin, Patestides & Stratakis, New York City, for plaintiff.

Radu Herescu, New York City, for defendant.

MEMORANDUM ORDER

VINCENT L. BRODERICK, District Judge.

This is a suit to enforce a French judicially affirmed arbitration award pursuant to treaty.

FACTUAL BACKGROUND

On January 26, 1980 plaintiff and defendant entered into a contract under which defendant agreed to build certain vessels for plaintiff, a West German shipowner. Defendant was a state owned Romanian foreign trading company engaged in shipbuilding, which actively utilized Romanian government commercial offices in Manhattan to solicit business.

The contract between plaintiff and defendant was never performed, and resultant disputes were submitted to arbitration in Paris pursuant to the contract. On November 2, 1982 and March 26, 1984 the arbitration board rendered interim and final awards against defendant for 6,000,000 Deutsche Marks plus interest and half of the arbitration costs. Defendant appealed to the French Court of Appeals, which on March 4, 1986 affirmed the award.

By decree of the Romanian Council of State dated June 26, 1987 the defendant was dissolved. On or about July 1, 1987 all of the defendant's assets and liabilities were transferred to a newly formed company, Uzinexportimport ("Uz")

On March 28, 1988 plaintiff brought this suit seeking enforcement of the arbitration award or, in the alternative, adoption of the judgment of the Court of Appeals of Paris as a United States court judgment.

Plaintiff served the summons and complaint on the Romanian Commercial Attache's office in New York, and it was sent by the clerk of this court by mail to defendant at its last known address pursuant to 28 U.S.C. § 1608(a)(3); a postal receipt was obtained. Defendant received actual notice; it contacted plaintiff about the matter.

Both parties have moved for summary judgment. Plaintiff also has moved to amend the complaint to add Uz as an additional defendant, as successor to the rights and obligations of the defendant.

Defendants argues (1) that this court lacks personal jurisdiction; (2) that service of process was inadequate; and (3) that failure to join an Uz as a party was fatal.

SUBJECT MATTER JURISDICTION

Preliminarily, I must determine whether or not this court has subject matter jurisdiction, which implicates inquiry into the applicability or inapplicability of sovereign immunity. The Foreign Sovereign Immunities Act, and particularly 28 U.S.C. § 1330, grants to district courts original jurisdiction in any nonjury civil action against a foreign state¹ under circumstances in which the foreign state is not entitled to immunity under sections 1605-1607 of Title 28 or under any applicable international agreement.² The Act places no limitations on the plaintiff's citizenship; the legislative history reveals an intent not to limit jurisdiction under the Act to an action brought by American citizens. Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983).

Paragraph 9 of defendant's Statement of Material Facts Pursuant to Rule 3(g) of the Civil Rules of this court states that "Defendant was a state owned foreign trade company organized under the laws of the Socialist Republic of Romania with its place of business at Galatz, Socialist Republic of Romania." In paragraph 22 of its answer, defendant also alleges that it "is a state foreign trading company, wholly owned by the Romanian Government and, as such, is an instrumentality of Romania within the meaning of FSIA 28 U.S.C., Sect. 1603(b)." State trading companies and state-owned export associations have been considered within the definition of "agency or instrumentality" of a foreign state, treated as a foreign state under 28 U.S.C. § 1603(a). S & S Machinery Co. v. Masinexportimport, 706 F.2d 411 (2d Cir.1983) cert. denied 464 U.S. 850, 104 S.Ct. 161, 78 L.Ed.2d 147 (1983) (involving a Romanian trading company as well as Romanian bank), citing H.Rep. 1487, 94th Cong., 2d Sess. 15-16, reprinted in 1976 U.S.Code Cong. & Admin.News 6604, 6613-6614.

28 U.S.C. § 1605(a)(6) was enacted in 1988. It provides that a foreign state (or under the applicable definitions its instrumentality), lacks immunity where the action is brought to confirm an award made pursuant to an agreement to arbitrate if the agreement or award is governed by a treaty or other international agreement binding upon the United States which calls for the recognition or enforcement of arbitral awards. As a procedural and jurisdictional statute not affecting substantive rights, § 1605(a)(6) would seem, other things being equal, to be applicable to the facts before me as they exist today, at the time of decision. See American Fire & Casualty Co. v. Finn, 341 U.S. 6, 16, 71 S.Ct. 534, 541, 95 L.Ed. 702 (1951); Able v. Upjohn Co., 829 F.2d 1330 (4th Cir.1987), cert. denied 485 U.S. 963, 108 S.Ct. 1229, 99 L.Ed.2d 429 (1988). No retroactive impairment of substantive rights would seem to be caused by application in this case of this jurisdictional provision. Compare United States Trust Co. v. New Jersey, 431 U.S. 1, 97 S.Ct. 1505, 52 L.Ed.2d 92 (1977) (applying the Contract Clause of Article I section 10 of the Constitution of the United States).

An important question is raised, however, by Section 3 of Public Law 100-640 which contained the 1988 amendments. Section 3 provided:

"The amendments made by this Act shall apply to actions commenced on or after the date of the enactment of this Act November 9, 1988." The present suit was commenced in March, 1988. Although the parties did not raise the Section 3 issue, I must consider it in determining the question of subject matter jurisdiction.

The plain language of Section 3 is affirmative: it merely states that the amendments "shall apply" to subsequently commenced suits, but there is undoubtedly an implied legislative intent to avoid potentially unfair or controversial retroactive application.

This action could have been discontinued and recommenced after November 9, 1988, the date of enactment of Public Law 100-640, without incurring any statute of limitations problems. Thus, the relevant question here is how Section 3 is to be construed to apply to a suit which could have been, but was not, dismissed and refiled to take advantage of the 1988 amendment. Was the failure to refile when this could readily have been done harmless error under F.R.C.P. 61 and 28 U.S.C. § 2111, or is it a fatal if technical jurisdictional error?

In Belasco v. W.K.P. Wilson & Sons, 833 F.2d 277, 282 (11th Cir.1987), a defendant filing papers to remove a case from state to federal court under 28 U.S.C. § 1441 failed to secure joinder in the application by another defendant as required. The court permitted the omission to be cured:

"While we are impressed by the authorities cited by plaintiffs in support of their argument that Wilson's failure to join in the removal ... made it defective, we must agree ... that given the novelty, complexity, and technicality of the question, the ends of justice and judicial efficiency are best served by treating the removal petition as if it had been amended to include Wilson. See 28 U.S.C. § 1653 (`Defective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts.'); Fed.R.Civ.P. 15(a) (`Leave to amend shall be freely given when justice so requires.')"

Rule 1 of the Federal Rules of Civil Procedure directs the court to interpret the Rules, and presumably other procedural law, to promote "the just, speedy and inexpensive determination of every action." This objective is implemented by 28 U.S.C. § 1653 which permits "defective allegations of jurisdiction" to be "amended, upon terms, in the trial or appellate courts." This would appear to allow plaintiff to correct the failure to refile provided no substantive rights would have been affected — i.e. if the case would not have been time barred on November 10, 1988.

28 U.S.C. § 1653 is supplemented by F.R.C.P. 15, which allows amendment of pleadings, amounting to a new filing, if the prerequisites set forth in the Rule are met. In particular, addition of Uz would represent a new filing subsequent to November 9, 1988, and it would relate back to the original filing date for purposes of the statute of limitations under F.R.C.P. 15(c) inasmuch as Uz is a successor entity to the defendant, charged with all notice and other prerequisites set forth in the Rule. Relation back for purposes of limitations only would, of course, only be appropriate if substantive rights are unaffected — which is the case here if suit could have been brought or renewed on November 10, 1988. Joinder of Uz would moot the objection raised by defendant that Uz is an indispensable party not yet joined.

It would appear appropriate to utilize 28 U.S.C. § 1653 and F.R.C.P. 15 to deem an act done, which could properly have been done, where — but only where — there is no prejudice to substantive rights and no contradiction of explicit language in a governing document. Here the intent of the negative implications of Section 3 rather than any explicit limitation is under consideration, and no substantive rights are adversely affected.

Failure of defendant to raise the question of the effective date of 28 U.S.C. § 1605(a)(6) cannot establish otherwise nonexistent jurisdiction by estoppel. But it does support the reasonableness of the interpretation of 28 U.S.C. § 1653 dealing with jurisdictional matters, and of F.R.C.P. 15 concerning amendments to pleadings, to allow...