Walpex Trading v. Yacimientos Petroliferos

• Decision Date: 01 May 1989
• Docket Number: No. 84 Civ. 4364 (PKL).,84 Civ. 4364 (PKL).
• Citation: 712 F. Supp. 383
• Parties: WALPEX TRADING CO., Plaintiff, v. YACIMIENTOS PETROLIFEROS FISCALES BOLIVANOS, Defendant.
• Court: U.S. District Court — Southern District of New York

712 F. Supp. 383

WALPEX TRADING CO., Plaintiff, v. YACIMIENTOS PETROLIFEROS FISCALES BOLIVANOS, Defendant.

No. 84 Civ. 4364 (PKL).

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

May 1, 1989.

COPYRIGHT MATERIAL OMITTED

Lane & Mittendorf, New York City (Edward C. Cerny III, of counsel), for plaintiff.

Gibson, Dunn & Crutcher, New York City (Mitchell A. Karlan, of counsel), for defendant.

OPINION AND ORDER

LEISURE, District Judge.

This extraordinary case has, over the course of several years, consumed more legal, financial and judicial resources in the litigation of essentially threshold issues than scores of cases that have been filed, resolved and forgotten in this Court during the same time period.

This is an action for breach of contract. Plaintiff Walpex Trading Co., Inc. ("Walpex") is engaged in the business of exporting goods. Defendant Yacimientos Petroliferos Fiscales Bolivianos ("YPFB") is a corporate instrumentality of Bolivia. Walpex alleges that, after an international bidding competition, it entered into a contract to sell YPFB 88,500 feet of three and one-half inch seamless steel tubing and accessories. Walpex alleges that, after partial performance, YPFB repudiated the contract.

BACKGROUND

The tortured history of this case will not be recounted here in its entirety, but a fairly detailed statement of the factual and procedural background is necessary to understand the issues now before the Court. The present determinations are made on the basis of legal and factual arguments made in the numerous submissions by the parties since the action began.

Plaintiff initially sought a judgment by default, and has on various occasions renewed that application. By opinion dated April 16, 1986, this Court denied the default motion, based on the imposition of certain conditions upon defendant. See, Walpex Trading Co. v. Yacimientos Petroliferos, 109 F.R.D. 692 (S.D.N.Y.1986) ("4/16/86 Opinion"). Those conditions have been satisfied, albeit in a less than timely fashion.¹ To the extent that plaintiff persists in seeking to secure a judgment by default, its applications are again denied.

Defendant has moved to dismiss the complaint, and asserts three separate grounds for dismissal: 1) that this Court lacks subject matter jurisdiction over the action; 2) that this Court lacks personal jurisdiction over defendant YPFB; and 3) the doctrine of forum non conveniens requires dismissal of the action.

Defendant initially based its motion exclusively on the inconvenience of the forum. Plaintiff opposed defendant's forum non conveniens motion on the record then before the Court, but made a "conditional motion," requesting that discovery or a hearing be afforded to plaintiff after, and if, defendant met its burden on the dismissal motion.

The Court determined not to resolve the forum non conveniens issue before it had satisfied itself that subject matter jurisdiction existed, and prior to determination of contested personal jurisdiction over defendant. See, e.g., Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 504, 67 S.Ct. 839, 841, 91 L.Ed. 1055 (1946) ("the doctrine of forum non conveniens can never apply if there is an absence of jurisdiction"). The parties were therefore instructed to brief these additional threshold issues. Plaintiff responded, in part, with a request for discovery. See, Plaintiff's Supplemental Memorandum Dated April 7, 1987, at p. 24. By order dated June 15, 1987, the Court ordered the parties to conduct discovery limited to the jurisdictional issues, and by order dated October 19, 1987, the parties were directed to simultaneously submit any supplemental briefing they deemed necessary. Plaintiff again responded that it had not been afforded adequate discovery. See, Plaintiff's Supplemental Memorandum Dated November 9, 1987. The Court then directed that certain specific interrogatories be answered fully, and the parties simultaneously submitted final additional briefs on March 27, 1989, which incorporated that discovery. From the various submissions, a fairly complete record has been developed on those facts related to the jurisdictional issues.

As noted, plaintiff is a New York corporation engaged in international commerce. YPFB is an instrumentality of the government of Bolivia, and purchases supplies for the Bolivian government's national oil program. YPFB employs approximately 7200 persons, all but twenty of whom work and reside in Bolivia. In addition to its Bolivian operations, YPFB maintains small foreign offices in Brazil, Argentina, Chile and Houston, Texas. See, Defendant YPFB's Supplemental Response ("YPFB Supp. Resp.") to Interrogatory 12. Of the YPFB employees who do not work and reside in Bolivia, five work at the Houston office. None of those individuals, who with one exception are Bolivian nationals, were involved with, or have any knowledge of, the events which gave rise to this lawsuit. All of YPFB's files and documents relating to the alleged contract are in Spanish, and located in Bolivia.

In addition to the transaction at issue here, YPFB has had numerous and substantial contacts with the United States, and with Walpex. See 9/12/86 Pirano Aff., ¶ 9. Many of its Bolivian employees regularly travel to the United States in connection with administration of the Houston, Texas office, as well as for training, to visit United States companies, for legal arbitrations and actions, for banking and financial negotiations, and for petroleum industry conventions. See, YPFB Supp. Resp. to Interrog. 15. YPFB has also maintained substantial banking and financial relationships in the United States, including several large accounts to facilitate its transactions with United States suppliers. See generally YPFB Supp. Resp. to Interrog. 18. During the relevant period there were over 1500 substantial letters of credit issued in the United States, running from defendant in favor of United States suppliers. As indicated below, the instant transaction involved a one half million dollar letter of credit running in favor of defendant. See, Affidavit of F. Walter Pirano, sworn to on June 20, 1985 ("6/20/85 Pirano Aff."), at Exh. D.

In or around February of 1982, YPFB issued a public invitation (the "invitation") to bid for a quantity of seamless steel tubing, which YPFB was to purchase for use in Bolivia's oil well industry. The invitation was communicated to Walpex in New York by plaintiff's Bolivian sales agent, Compania de Representaciones Internacionales, S.R.L. ("COREIN"). 6/20/85 Pirano Aff., ¶ 3. The invitation was published, in Spanish, in major Bolivian newspapers, and called for the steel tubing to be delivered to YPFB in La Paz. Declaration of Jorge Flores Lopez, sworn to on May 23, 1986 ("Flores Decl."), ¶ 6; Declaration of Dr. Ramiro Arzabe Mercado, sworn to on May 23, 1986 ("5/23/86 Arzabe Decl."), ¶ 2.²

The invitation referred to certain "specifications," which COREIN evidently obtained in connection with the submission of Walpex' bid. 5/23/86 Arzabe Decl., ¶¶ 2-3. Those specifications contain a choice of Bolivian law clause, and an apparent choice of Bolivian forum clause. See, Flores Decl, ¶¶ 6, 12. The specifications explicitly refer to Regulations for Acquisitions and Contracts of YPFB (the "regulations"), which require choice of Bolivian forum and law clauses. The regulations themselves have the force of law in Bolivia. Flores Decl., ¶ 7.

In April of 1982, YPFB advised COREIN, in writing, that Walpex' bid had been awarded. 6/20/85 Pirano Aff., Exh. B. On this basis, Walpex alleges that it had a valid contract to sell YPFB 88,500 feet of three and one half inch seamless steel tubing and accessories. In reliance on that contract, Walpex asserts that it entered into an irrevocable supply agreement with Vinson International Supply Company ("Vinson"). All of the activities involved in the supply of the tubing prior to its shipment were to occur in the United States. See generally Plaintiff's Memorandum Dated April 7, 1987 at pp. 11-12. Additionally, Walpex alleges that defendant required it to obtain an irrevocable letter of credit, issued by Chase Manhattan Bank, N.A., which named YPFB as beneficiary and guaranteed plaintiff's performance under the contract. Complaint ¶¶ 7, 9-11; 6/20/85 Pirano Aff., ¶ 7, Exh. D.

YPFB argues that no contract between it and Walpex ever existed. The specifications seem to contemplate execution of a formal written contract, and COREIN was specifically invited to appear at the offices of YPFB to "formalize the purchase order ... and to sign the contract according to legal formality." 6/20/85 Pirano Aff., Exh. B. No additional written instrument was executed. These allegations present serious questions which may go to the merits and sufficiency of the substantive contract claim, but those issues are not presently before the Court. In the absence of a challenge to the sufficiency of the Complaint, the Court, for present purposes, assumes a valid legal claim. See Perez v. Ortiz, 849 F.2d 793, 797 (2d Cir.1988); Square D. Co. v. Niagara Frontier Tariff Bureau, Inc., 760 F.2d 1347, 1365 (2d Cir. 1985), aff'd 476 U.S. 409, 106 S.Ct. 1922, 90 L.Ed.2d 413 (1986).

On June 21, 1982, COREIN wrote to YPFB, and advised YPFB that although "the Purchase Order still has not been delivered by YPFB to COREIN ... it was necessary to bind the material with the manufacturer when COREIN received notice of the award." Karlan Aff., Exh. C (Spanish), D (translation). YPFB was also notified of the steps that Walpex had taken in reliance on the bid award. Id. In June of 1984, upon YPFB's alleged renunciation of the agreement, plaintiff filed the present Complaint.

DISCUSSION

A. Subject Matter Jurisdiction.

It is conceded that YPFB, as an instrumentality of the Bolivian government, has the status of a "foreign state," as that term is defined in 28 U.S.C. § 1603. Plaintiff asserts that this Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1330(a). That...