Urs Corp. v. Lebanese Co. for Development

• Citation: 512 F.Supp.2d 199
• Decision Date: 28 September 2007
• Docket Number: Civ. No. 06-415-SLR.
• Parties: URS CORPORATION, Plaintiff, v The LEBANESE COMPANY FOR the DEVELOPMENT AND RECONSTRUCTION OF BEIRUT CENTRAL DISTRICT SAL, Defendant.
• Court: U.S. District Court — District of Delaware

512 F.Supp.2d 199

URS CORPORATION, Plaintiff, v The LEBANESE COMPANY FOR the DEVELOPMENT AND RECONSTRUCTION OF BEIRUT CENTRAL DISTRICT SAL, Defendant.

Civ. No. 06-415-SLR.

United States District Court, D. Delaware.

September 28, 2007.

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Edward P. Welch, Paul J. Lockwood and Edward B. Micheletti, of Skadden, Arps, Slate, Meagher & Flom LLP, Wilmington, DE, of Counsel Jeffrey H. Dasteel, Jason D. Russell, Stacy Horth-Neubert and Marina V. Bogorad of Skadden, Arps, Slate, Meagher & Flom LLP, Los Angeles, CA, for Plaintiff.

Samuel A. Nolen and Anne Shea Gaza, of Richards, Layton, & Finger, PA, Wilmington, DE, of Counsel: Paul B. Carberry of White & Case LLP, New York City, for Defendant.

MEMORANDUM OPINION

SUE L. ROBINSON, District Judge.

I. INTRODUCTION

On June 30, 2006, plaintiff URS Corporation ("URS") filed this action against defendant, the Lebanese Company for the Development and Reconstruction of Beirut Central District SAL ("SOLIDERE"), based on its inclusion in an arbitration proceeding currently underway in Paris, France. (D.I. 1 at ¶ 3) Before the court are SOLIDERE's motion to dismiss (D.I. 32) based on lack of personal jurisdiction and improper venue, and URS's motion for a preliminary injunction seeking to enjoin arbitration (D.I. 36). On March 23, 2007, plaintiff URS filed a motion for conditional leave to file a surreply. (D.I. 123) This court heard oral argument on May 16, 2007. For the reasons that follow, SOLDERE's motion to dismiss is granted in part and denied in part. Plaintiffs motion for a preliminary injunction is denied.

II. BACKGROUND

A. The Entities

SOLIDERE is a publicly traded joint stock company organized under the laws of Lebanon. (D.I. 34 at ¶ 3) URS is an engineering design firm organized under the laws of Delaware. (D.I. 1 at ¶ 2) Radian International LLC ("Radian") is a Delaware limited liability company and subsidiary of URS that provides engineering and environmental contractor services. (Id. at ¶¶ 3, 6)

B. The Creation of SOLIDERE

After the Lebanese civil war, Lebanon began to rebuild the Beirut Central District ("BCD"), which was heavily damaged during the war. (D.I. 34 at ¶ 2) Initially, this process was undertaken by the State of Lebanon through the Council of Development and Reconstruction ("CDR"). (Id.) The CDR is the authority in charge of overseeing major public works projects in Lebanon. (Id.) Several problems occurred, and Law 91-117 came into effect, which authorized' the CDR to accomplish rebuilding by contracting with a private entity. (Id.) On May 5, 1994, SOLIDERE was formed as a private-sector, joint stock company on the basis of Lebanese Law 91-117 ("Law 91-117"). (Id. at ¶ 3) A company formed pursuant to Law 91-117 must have its Articles of Incorporation approved by the Council of Ministers. (D.I. 34, ex. A) Further, Law 91-117 dictates that the purpose of the company formed shall be the "development and reconstruction of the area in accordance with the approved Master Plan and Guiding Layout, the sale of the developed lots, the erection of buildings thereon and the sale or lease of such buildings." (Id.) Lebanese Law 91-117 compelled owners of real estate properties in the BCD to contribute their rights to SOLIDERE in exchange for shares in the company. (Id. at ¶ 4; D.I. 111 at ¶ 4)

SOLIDERE's business activities are the acquisition of real estate properties in the BCD and the re-construction, restoration and commercial development of the area, including the remediation of the Normandy Landfill. (D.I. 34 at ¶ 3) On September 20, 1994, the CDR entered into a contract with SOLIDERE, under which SOLDERE became responsible for executing the infrastructure of the BCD. (Id. at ¶ 4; D.I. 93, ex. 106) Pursuant to its agreement with the CDR, SOLIDERE agreed to "finance and ensure the execution of the construction of roads, squares and public parks at the expense and for the account of the State." (D.I. 93, ex. 106 at SODEL29747) Specifically, CDR and SOLDE RE are counterparties to an agreement under which SOLIDERE is to perform the reconstruction work on the infrastructure of the BCD. (D.I. 111 at ¶ 2) CDR approval was required "for all tendered documents relating to infrastructure works within the BCD." (D.I. 89, ex. 1 at 119:19-22,120:5-11; D.I. 93, ex. 112) As compensation for its efforts, SOLIDERE received title and development rights to 291,800 square meters of land on the reclaimed land known as the Normandy Landfill. (D.I. 34 at ¶ 4)

SOLIDERE is owned by individuals, companies and others. (Id. at ¶ 5) Sixty percent of SOLIDERE's initial capital consisted of contributions in kind represented by the ownership of real estate, while forty percent represented cash contributions made by private investors from Lebanon and abroad. (Id.) The State of Lebanon is one of over 34,000 shareholders in SOLIDERE. (Id.) As of October 13, 2006, the Lebanese government owned 83,707 shares, representing 0.05 % of SOLIDERE's total shares. (Id.) Shares of SOLIDERE are registered on the Beirut Stock Exchange and the Kuwait Stock Exchange. (Id.)

SOLIDERE is managed by its Board of Directors, which is comprised entirely of private citizens with the exception of a single director who represents the State of Lebanon and the Municipality of Beirut. (Id.) This director has the same powers as the other directors. (Id.) Employees of SOLIDERE are employed solely by SOLIDERE and are not employed in any public or governmental capacity by the Lebanese government. (Id.) SOLIDERE's Articles of Incorporation provide that at least two-thirds of its twelve-member board of directors must be Lebanese nationals, but impose no other restrictions on who may be employed by SOLIDERE. (Id.)

C. The Contract

On January 25, 1999, SOLIDERE and Radian entered into a contract (the "SR contract") under which Radian was responsible for the reclamation and remediation part of the Normandy Landfill site in Beirut. (D.I. 1, ex. B) The Normandy Landfill, part of the BCD, had been created as a result of waste deposited into the sea off the coast of Beirut during Lebanon's civil war. (D.I. 34 at ¶ 3) Pursuant to the SR contract, Radian was required to excavate part of the Normandy Landfill site, sort and treat the materials, and backfill them after treatment. (D.I. 1) The only two signatories to the SR contract are Radian and SOLIDERE. (Id., ex. B) The SR contract contains a choice of law clause selecting the laws of the Republic of Lebanon, and also provides that all disputes arising therefrom are to be resolved pursuant to arbitration in Paris, France under the Rules of Arbitration of the International Chamber of Commerce ("ICC"). (D.I. 34, ex. C at GCC §§ 44, 50) Specifically, the arbitration clause provides that

[a]ll disputes arising out of or in connection with the present Contract shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce in force as of January 1st, 1998 by one or more arbitrators appointed in accordance with the said Rules. The language of arbitration shall be english. The place of arbitration shall be Paris.

(D.I. 34, ex. C at GCC § 44) CDR approval was a condition precedent to executing the SR contract, and the SR contract was to be performed according to the CDR's plans. (D.I. 1, ex. B at Art. 8 & GCC § 28)

At the time the SR contract was signed, Radian was owned by the Dames & Moore Group. (Id. at ¶ 6) URS purchased the Dames & Moore Group in June 1999, several months after the SR contract was signed. (D.I. 1 at ¶ 6) Radian commenced its work under the SR contract on April 14, 1999. Eventually, a dispute arose between Radian and SOLIDERE regarding gas emissions at the Normandy Landfill. (D.I. 34 at ¶ 7d) In accordance with the SR contract, the dispute was submitted to ICC arbitration in May 2003 (the "first arbitration"). (D.I. 1 at ¶ 43) In the first arbitration SOLIDERE obtained an award against Radian and submitted the award against Radian to the French courts for confirmation. (Id. at ¶ 43) SOLIDERE and Radian were unable to resolve their differences, despite the first arbitration award. (D.I. 34 at ¶ 7) SOLIDERE terminated the SR contract on February 10, 2006. (Id. at ¶ 7)

D. The Pending Arbitration

On February 13, 2006, SOLIDERE commenced a second arbitration (the "pending arbitration").¹ (D.I. 1, ex. A) This second Request for Arbitration with the ICC named both URS and Radian as Respondents. (Id.) The ICC court is not a typical court; it is an administrative body that ensures the application of the ICC rules. (D.I. 35, ex. C at Art. 1) URS, on March 13, 2006, invoked Article 6(2) of the ICC rules to challenge its inclusion in, the arbitration proceedings. (Id., ex. D, letter dated March 13, 2006) Under Article 6(2), where the "existence, validity or scope of the arbitration agreement" is in issue, the ICC court decides whether it is "prima facie satisfied that an arbitration agreement under the Mules may exist." (Id., ex. C at Art. 6(2)) if the ICC court is prima facie satisfied that such an agreement may exist, the ICC court will refer the case to the arbitral tribunal which will decide whether there is in fact such an agreement to arbitrate. (Id. at Art. 6) On June 2, 2006, the ICC court decided, pursuant to Article 6(2), that it was prima facie satisfied that an arbitration agreement may exist between URS and SOLIDERE. (Id., ex. D) The ICC tribunal, composed of confirmed arbitrators, was constituted on October 18, 2006. The tribunal held a preliminary hearing in Paris, France on December 18, 2006. At that hearing, the tribunal set a schedule for briefing on URS's jurisdictional objections concluding with a hearing to be held in December 2007. (D.I. 94, ex. 129)

Presently, URS asks this court for a declaration that URS has not agreed to arbitrate with SOLIDERE and, therefore, is not bound to arbitrate with SOLIDERE in the pending arbitration...