Citigroup Global Mkts., Inc. v Metals Holding Corp.
Annotate this CaseDecided on June 8, 2006
Supreme Court, New York County
Citigroup Global Markets, Inc., Plaintiff,
against
Metals Holding Corporation AND AMIR P. WEISSFISCH, Defendants.
604205/05
APPEARANCES:
For Plaintiff:For Defendants:
Schupbach, Williams & Pavone LLPDebevoise & Plimpton
1010 Franklin Avenue, Suite 300Attorney for Metals Holding Corporation
Garden City, NY 11530919 Third Avenue
(Arthur C. Schupbach)New York, NY 10022
(David W. Rivkin, Frances L. Kellner,
Elizabeth J. Maxwell)
Gibson, Dunn & Crutcher LLP
Attorneys for Amir P. Weissfisch
200 Park Avenue
New York, NY 10166
(Randy M. Mastro, Mark B. Holton,
Megan A. Jones)
Bernard J. Fried, J.
This is an interpleader action brought by plaintiff Citigroup Global Markets, Inc. (CGM), which involves a dispute between defendants Metals Holding Corporation (MHC) and Amir P. Weissfisch (Amir) over the ownership of MHC, whose assets are currently being held by CGM. Because both defendants claim ownership of the assets, CGM filed this action seeking, inter alia, an order that it be directed to deposit the assets into this Court, and that Amir and MHC be required to interplead together concerning their claims to the property.
This interpleader action is one small piece of a much larger multi-jurisdictional international dispute involving several parties, none of whom are residents of New York. That dispute is presently being litigated in three fora other than this Court: in an arbitration before a single arbitrator in Geneva, Switzerland; in the High Court of Justice in London, England; and in the Supreme Court of the Bahamas. Indeed, the central issue underlying Amir's cross claim in this action the ownership of MHC is among the issues that are in active litigation before all three [*2]other fora.
Motion Sequence Nos. 001 and 002 are consolidated for disposition. In Motion Sequence No. 001, MHC moves for an order sealing the court records in this action. In Motion Sequence No. 002, MHC moves for an order: (1) pursuant to the Federal Arbitration Act, compelling Amir to participate in an arbitration in Switzerland, and staying this action, pending resolution of the arbitration; or (2) pursuant to CPLR 327, staying or dismissing this action on the ground of forum non conveniens; or (3) pursuant to CPLR 2001, staying this action on the basis of international comity; and (4) permitting certain disputed assets to be placed in an escrow account. CGM cross-moves, pursuant to CPLR 1006 (f) and 2215, for an order discharging it from liability to any party; directing it to pay into court the subject matter of this action; and awarding CGM its costs, disbursements and expenses, including attorneys' fees, in conjunction with this action.
For the reasons set forth below, MHC's motion for dismissal on the ground of forum non conveniens is granted, and the complaint is dismissed. Plaintiff's cross motion for discharge and MHC's motion to seal the court record are denied as moot.
Plaintiff CGM, a New York corporation (Complaint, ¶ 1), is not a party-in-interest, but is simply a stakeholder in this interpleader action. MHC is a Bahamian company headquartered in the Bahamas. It conducts no business in New York (First Aff. of Toby Benjamin Michael Graham, ¶ 1). Amir is an individual who is a resident of the Bahamas (Complaint, ¶ 4).
The APW Trust is a Bahamian trust governed by Bahamian law (First Graham Aff., ¶¶ 5, 10). In 2002, Philip Davis, Esq., a prominent barrister in the Bahamas, became trustee of the APW Trust (id., ¶ 5). The central issue in this action concerns the disputed ownership of MHC. It is Davis' position that MHC is owned by the APW Trust, of which he is the sole trustee, and of which Amir and his children were originally (and may still be) discretionary beneficiaries (id., ¶ 5 [a]). Amir, however, claims that the shares of MHC form part of the assets of a Liechtenstein foundation of which his family is the beneficiary, and into which those shares were transferred from the APW Trust in late 2003 (id., ¶ 5 [b]).
Davis contends that, in April 2004, Amir made a false statement to him in order to procure the transfer of various assets from the APW Trust to trusts that were controlled by Amir (id., ¶ 10). Davis discovered Amir's alleged deception in May 2004 (id., ¶ 11). Thereafter, Amir sought directly or indirectly to assert control over various companies and their assets, including companies which ostensibly belonged to the APW Trust, but which Amir now claimed were not the property of the Trust after all. One of these companies was MHC. It is Davis' belief that, as a part of this process, Amir had David Rounce, the president, CEO and sole director of MHC, give instructions to Salomon Smith Barney (SSB) (now CGM) to transfer all of the assets of several accounts held at SSB in MHC's name to an SSB account in Amir's name (id., ¶ 11).
Thus, by letter dated June 14, 2004, Rounce instructed CGM to transfer all of the assets contained in MHC's SSB accounts into Amir's SSB account (Complaint, ¶ 8). CGM followed Rounce's instructions (id, ¶ 9). By letter dated June 17, 2004, Amir then instructed CGM to transfer the sum of $3,500,000, representing assets which had been transferred from MHC's SSB accounts to Amir's SSB account, to the account of a third party in Geneva, Switzerland (id., ¶ 10).
When Davis learned of Amir's alleged deception, he took steps to prevent Amir from taking various companies and assets for himself. On June 16, 2004, Davis contacted the Bahamian police, and lodged a criminal complaint against Amir. He also took action to undo or prevent the steps Amir had undertaken to assert control over the APW Trust assets. On June 21, 2004, Davis removed Rounce as a director of MHC. Davis further instructed his lawyers, Herbert Smith, to write [*3]to SSB to ensure that the proposed dissipation of MHC's assets did not take place (First Graham Aff., ¶ 12). Thereafter, by correspondence dated June 21, 2004, Davis' attorneys notified CGM that Rounce would be removed as director of MHC, and asked that CGM not follow Rounce's instructions regarding disposition of assets in the MHC accounts (Complaint, ¶ 11). It was only after June 21, 2004 that Davis learned of Amir's claim that the MHC shares had been transferred to a Liechtenstein foundation in 2003 (First Graham Aff.,
¶ 12).
On July 29, 2004, Amir entered into an arbitration agreement (the Arbitration Agreement) with Davis, Amir's brother Rami Weissfisch (Rami) and, as arbitrator, Anthony Julius, in which he agreed to arbitrate all disputes between the parties (id., ¶ 13; Exh B). The negotiations leading up to the Arbitration Agreement took place in London and the Bahamas, and the Agreement was signed in London and the Bahamas (id.). The Arbitration Agreement provides that it is to be governed by Swiss law, and that the seat of the arbitration is in Geneva, Switzerland (id., ¶ 15).
Pursuant to the terms of the Arbitration Agreement, Julius had "the broadest possible powers to make final and binding determinations or awards on all issues and disputes between the parties in full and final settlement of them" (Agreement, ¶ 1.1 [First Graham Aff., Exh B]). The Agreement also provides for "an immediate standstill," pursuant to which the parties agreed that they would bring no new legal proceedings for the duration of the arbitration (id., ¶ 2.1; First Graham Aff., ¶¶ 18, 19). Among the disputes given the arbitrator to decide was the ownership of MHC, the company who assets are involved in this litigation.
Under the terms of the Arbitration Agreement, the arbitration would proceed in four stages. Stages 1 and 2 provide for an exchange: Davis was to write to the Bahamian law enforcement authorities withdrawing the criminal charges he had made against Amir, and Amir was to return various companies and their assets, together with the documents necessary to transfer title to them (the Transfer Documents), which were to be held by a stakeholder (First Graham Aff., ¶ 20). The assets and documents would then be released to Davis when the Bahamian authorities confirmed that the criminal proceedings had been discontinued (id.). The provision under which Amir was to return the various companies, paragraph 3.1, provides for the transfer of "companies purportedly transferred out of the APW Trust at any time," which, according to Davis, covers the shares and assets of MHC (id., ¶¶ 21-22). Stage 3 provides for arbitration of the substantive disputes of the parties, and Stage 4 addresses enforcement (id.,
¶ 20).
Shortly after execution of the Arbitration Agreement, the parties commenced Stage 1 of the arbitration. Julius held the first arbitration hearing on August 5, 2004. By agreement of the parties, the arbitrator agreed to take direct custody of the Transfer Documents and assets in place of the stakeholder (id., ¶ 24). Amir failed to comply with his obligations to make this transfer in a timely manner pursuant to the terms of the Arbitration Agreement, and his compliance with these obligations generally, including the question of whether MHC was to be returned pursuant to the Agreement, became a subject of dispute before the arbitrator (id.).
One of the issues that was debated was whether MHC was to be treated as a paragraph 3.1 company. It was Davis' position that MHC was a paragraph 3.1 company, and that its shares and assets should have been transferred by Amir to the stakeholder under that paragraph, and than transferred back to the APW Trust once the Bahamian criminal procedure had been discontinued under the terms of the Arbitration Agreement (id., ¶ 25). Conversely, Amir argued that MHC should not be treated as a paragraph 3.1 company (id., ¶ 26). [*4]
Although the issue of whether MHC should be returned was not yet resolved, on May 3, 2005, Julius issued an order making clear that he would nevertheless send to the Bahamian authorities Davis' letter requesting withdrawal of the criminal proceedings (id., ¶¶ 31-34). On May 18 and 25, 2005, the Bahamian authorities sent letters back to Davis advising him that the criminal proceeding had been withdrawn (id., ¶ 36). Shortly thereafter, Julius, in accordance with Stage 2 of the arbitration, issued an order dated May 25, 2005, releasing certain property and the Transfer Documents to Davis (id., ¶ 38). On June 1, Davis took possession of that property and those documents (id., ¶¶ 39-40).
Amir then sought to escape from his obligations under the Arbitration Agreement. He challenged the Arbitration Agreement and the authority of the arbitrator, and filed litigation in England and the Bahamas in an effort to stop the arbitration (id., ¶ 41).
In early June 2005, Amir commenced an action in the High Court in London against Davis, Julius, and Rami, his brother (id., ¶ 43). On June 1, 2005, Amir obtained an ex parte order enjoining Davis from receiving or using the Transfer Documents. He also obtained an order to prevent Julius from acting as arbitrator (id., ¶¶ 43-44). Shortly thereafter, the injunction lapsed, and on July 13, 2005, Amir discontinued the action (id., ¶ 46).
On June 7, 2005, Amir commenced an action in the Supreme Court of the Bahamas, and obtained an ex parte injunction against Davis and Rami similar in terms to the English injunction. The injunction lapsed on June 7, but the case, in which Amir is seeking to render the arbitral awards ineffective, is ongoing (id., ¶¶ 47-49).
On July 1, 2005, Amir's minor children brought another action in the Bahamas seeking to restrain Davis, Amir and Rami from participating in the arbitration, and contending that the shares of MHC are held in the APW Trust (id., ¶¶ 50-52). The Bahamian Court has conducted four hearings on that action, and a two-week long hearing was scheduled to commence on May 22, 2006 (id., ¶ 53).
Although on May 25, 2005, Davis had entered an order in the arbitration proceeding requiring Amir to transfer certain of the Transfer Documents held in Nassau, in the Bahamas, to Davis, Amir did not comply with that order. Davis then commenced litigation in the Bahamas to enforce that Order. Amir sought a stay of that action on the ground that he would be challenging the Arbitration Agreement in courts in England (id., ¶ 54).
On August 19, 2005, Amir commenced a second action in the English High Court, seeking, among other things, a declaration that the Arbitration Agreement is void on grounds including misrepresentation, duress, and undue influence (id., ¶¶ 56-57). Amir's request to enjoin the arbitration was heard and denied by a judgment dated January 12, 2006 (id., ¶ 58). Amir sought leave to appeal that decision. On March 8, 2006, the Court of Appeal dismissed Amir's appeal (id., Exh A). The Court of Appeal agreed with the lower court that, as a general matter, the arbitrator should determine the validity of the Arbitration Agreement, subject to the review of the Swiss Courts (id., ¶ 65). The lower court will be deciding at a hearing whether it will accept jurisdiction over Amir's claim that the arbitration agreement is invalid (id., Exh A, ¶ 2).
Notwithstanding this litigation, Julius has moved forward with the arbitration, and has requested submissions on the issue of jurisdiction of the arbitral hearing. A hearing was scheduled for March 21, 2006, in Geneva (id,. ¶¶ 63-64).
With respect to the proceedings in this interpleader action, CGM initially commenced this action on July 1, 2004, and then filed the complaint again on November 25, 2005. On February 10, 2006, MHC answered the complaint and demanded judgment dismissing the complaint, or, in [*5]the alternative, staying this action pending final resolution of litigation between the defendants in a foreign forum. Amir also answered the complaint on February 10. In his answer, Amir asserts that Rounce, as director of MHC, was authorized to direct the transfer of assets to Amir's account, and that, consequently, the assets transferred now belong to Amir. In addition, Amir brought a cross claim against MHC seeking a declaration that he is the sole and rightful owner of the assets at issue.
MHC now moves to dismiss the complaint, inter alia, on the ground of forum non conveniens, arguing that New York is not the most fair or convenient place to adjudicate this dispute, because the central issue in this action the issue of who ultimately owns the disputed assets is currently being litigated in three foreign fora.
Conversely, Amir argues that this action clearly belongs in New York because it merely involves the transfer, in New York, of assets from one CGM account to another. As such, Amir argues, the principal issue in this case is whether, as a result of the transfer, Amir is entitled to the assets placed into his account pursuant to the transfer.
It is well settled that New York courts "need not entertain causes of action lacking a substantial nexus with New York" (Martin v Mieth, 35 NY2d 414, 418 [1974]). The doctrine of forum non conveniens, codified in CPLR 327 (a), "permits a court to stay or dismiss such actions where it is determined that the action, although jurisdictionally sound, would be better adjudicated elsewhere" (Islamic Republic of Iran v Pahlavi, 62 NY2d 474, 478-479 [1984], cert denied, 469 US 1108 [1985]). The central focus of the forum non conveniens inquiry is to ensure that trial will be convenient, and will best serve the ends of justice (see Piper Aircraft Co v Reyno, 454 US 235 [1981]; Capital Currency Exch., N.V. v National Westminster Bank PLC, 155 F3d 603 [2d Cir 1998], cert denied 526 US 1067 [1999]). If the balance of conveniences indicates that trial in plaintiff's chosen forum would be unnecessarily burdensome for the defendant or the court, then dismissal is proper (see id.).
New York courts consider the availability of an adequate alternative forum and certain other private and public interest factors when evaluating New York's nexus to a particular action, and deciding whether to dismiss an action on the grounds of forum non conveniens (Islamic Republic of Iran v Pahlavi, 62 NY2d 474, supra). The burden is on the defendant challenging the forum to demonstrate the relevant private or public interest factors which militate against accepting the litigation (id; Highgate Pictures, Inc. v De Paul, 153 AD2d 126 [1st Dept 1990]). Although not every factor is necessarily articulated in every case, collectively, the courts consider and balance the following factors in determining an application for dismissal based on forum non conveniens: existence of an adequate alternative forum; situs of the underlying transaction; residency of the parties; the potential hardship to the defendant; location of documents; the location of a majority of the witnesses; and the burden on New York courts (see Islamic Republic of Iran v Pahlavi, 62 NY2d 474, supra; World Point Trading PTE v Credito Italiano, 225 AD2d 153 [1st Dept 1996]; Evdokias v Oppenheimer, 123 AD2d 598 [2d Dept 1986]). A motion to dismiss on the grounds of forum non conveniens is subject to the discretion of the trial court, and no one factor is controlling (Islamic Republic of Iran v Pahlavi, 62 NY2d 474, supra; see also Matter of New York City Asbestos Litig. v Rapid American Corp., 239 AD2d 303 [1st Dept 1997]).
The present action must be dismissed on the ground of forum non conveniens, because the number and weight of the relevant factors in this action are centered abroad, and not in New York. In this case, the following factors all strongly favor dismissal: (1) the lack of a substantial nexus with New York; (2) the fact that neither Amir nor MHC are residents of New York; (3) the availability of an alternative forum in Switzerland where the arbitration is pending, [*6]or in England or the Bahamas, where related litigation is proceeding; (4) the location of all or virtually all of the documents and witnesses abroad; and (5) the fact that foreign law applies to the disputed issues.
Nexus with New York
Where, as here, the action is almost entirely concerned with the events, institution and law of a foreign nation, "the action cannot be said to have a substantial nexus' with New York," and must be dismissed (Tetra Fin. (HK) Ltd. v Patry, 115 AD2d 408, 410 [1st Dept 1985], appeal withdrawn 67 NY2d 758 [1986] [citation omitted]; see also Chawafaty v Chase Manhattan Bank, N.A., 288 AD2d 58, 58 [1st Dept 2001], lv denied 98 NY2d 607 [2002] ["[t]his action lacks a substantial connection to New York and would be burdensome to its courts"]).
New York has no interest in adjudicating this essentially foreign dispute. The dispute over the assets centers on the ownership and control of a Bahamian company, and virtually all of the relevant underlying events occurred outside of New York. The fact that the "transaction[s] out of which the cause of action arose occurred primarily in a foreign jurisdiction" weighs strongly in favor of dismissal on grounds of forum non conveniens (Islamic Republic of Iran v Pahlavi, 62 NY2d at 479; see e.g. Millicom Intl. Cellular S.A. v Simon, 247 AD2d 223 [1st Dept 1998] [where crucial events underlying the transaction occurred in the Philippines, involved non-New York resident parties and witnesses, and a single act occurred in New York, the lack of a sufficient nexus with the state justified forum non conveniens dismissal]).
Indeed, the only connection this dispute has to New York is the deposit of assets with CGM. This connection is insufficient to turn this dispute between two foreign residents into one of concern to New York courts and juries (see e.g. World Point Trading PTE v Credito Italiano, 225 AD2d 153, supra [forum non conveniens dismissal was appropriate where financial dispute with tenuous connection to New York was ancillary to dispute over the underlying foreign commercial transaction, which was already subject to litigation in Italy, and involved foreign parties and witnesses]; A&M Exports, Ltd. v Meridien Intl. Bank, Ltd., 207 AD2d 741 [1st Dept 1994] [affirming dismissal on ground of forum non conveniens, and holding that sole New York connection of defendants' deposit of funds in New York accounts and plaintiff's presentment of drafts against these accounts, which were dishonored, was an insufficient nexus]).
In opposition to the motion, Amir contends this litigation has a clear and substantial connection to this State, because virtually all of the transactions giving rise to this dispute occurred in or were directed to New York. Specifically, Amir contends that this case is only about the mechanics of the transfer of assets from MHC's account to Amir's account, and that "whether, as a result of the Transfer, Amir is entitled to the assets placed into his account pursuant to the Transfer" (Amir Mem. of Law, at 4, 6).
To the contrary, MHC has demonstrated that this dispute is about the ownership of MHC, an issue that is indisputably being litigated in several other fora, including a Swiss arbitration. To determine who is entitled to the assets in the CGM account, and thus, the propriety of the transfer, it is necessary to examine in detail the facts underlying their ownership, including whether Rounce had authority to act for MHC, and whether he acted properly under Bahamian law in accordance with that authority when he attempted to have the assets transferred to Amir's account; Davis's role as the sole trustee of the Bahamian APW Trust, which asserts ownership over MHC; whether Davis had the authority to reverse or freeze the transfer; and the question of who owned MHC at the time of the transfer.
Indeed, Amir's actions in this case provide strong evidence that Amir himself [*7]recognizes that whether the transfer was proper depends in large part on the underlying issue of ownership. In his March 30, 2006 document requests, Amir seeks, inter alia, all documents reflecting the relationship between MHC and Rounce, Amir and Davis, as well as a multitude of documents concerning MHC that go back to January 1, 2002, including all minutes of meetings of shareholders and all resolutions of directors (see Aff. of Elizabeth Maxwell, Exh 1, at 4-5). These requests make clear that he recognizes the breadth of issues that will necessarily be before this Court if it is to determine who is entitled to the assets held by CGM, including the issues of MHC's ownership. If Amir believed that this case involved only the simple issue of the mechanics of the transfer of assets from one CGM account to another, he would not have requested such a breadth of documents.
Moreover, the dispute over the proper ownership of assets once held in MHC's account and, by extension, the ownership of MHC itself, is squarely before the arbitrator in Switzerland. In particular, Amir has disputed that the APW Trust owns MHC, claiming instead that MHC has been owned by a Liechtenstein foundation since 2003. This dispute over the ownership of MHC is just one of many disputes that led Amir, Davis and others to negotiate and enter into the Arbitration Agreement (see Third Graham Aff., ¶¶ 9-10). Indeed, in the second action instituted by Amir in the High Court of Justice in England to challenge the validity of the Arbitration Agreement, Amir alleged that the fact that Davis instructed his attorneys to ask CGM to refrain from acting on Rounce's instructions was part of one of the disputes leading to entry into the Agreement (see Second Graham Aff, Exh F, ¶ 3.14 [viii]). In addition, the Arbitration Agreement was broadly worded to include "all issues and disputes between the parties" (Arbitration Agreement, ¶ 1.1). Thus, there can be little doubt that the parties' dispute over the ownership of MHC and its assets is among the disputes to be adjudicated in the course of the arbitration.
The issue of the ownership of MHC is also sub judice before the Bahamian Supreme Court. In July 2005, Amir's children brought suit in the Bahamas against Davis, Amir and Rami (the Children's Action), alleging, inter alia, that the shares in MHC are held by the APW Trust (see Second Graham Aff, Exh D, at 77). That case is being actively litigated. One of the summons which was due to be heard on May 22 requests all documents "relating to any other payment made out of the APW Trust." In that action, the children assert that MHC is one of the assets of the APW Trust. Thus, it is highly likely that the transfer from MHC's account to Amir's account is under consideration in the Bahamian court. Although Amir asserts, in a May 12, 2006 letter to this Court, that the issue of the ownership of MHC is not at issue in the Bahamian litigation, and attaches certain documents that supposedly support this assertion, in fact, the additional submissions do not contradict MHC's position that the ownership of MHC is pending before the Supreme Court of Bahamas, particularly in the Children's Action (see Affidavit of Brian M. Moree, ¶ 12, submitted with the 5/12/06 letter ["The composition of the trust assets will no doubt have to be considered ... in the Children's Action"]).
Accordingly, it is clear that this action has no substantial nexus with New York.
Residency of the Parties
Both Amir and MHC, the defendants in the interpleader action, are foreign residents. Amir is a Bahamian resident, and MHC is a Bahamian company that conducts no business in New York. CGM, who is merely a stakeholder, is not a real party-in-interest. The fact that the parties-in-interest in this action are both foreign residents weighs heavily in favor of dismissal on forum non conveniens grounds (see Wyser-Pratte Mgt. Co. v Babcock Borsig AG, 23 AD3d 269 [1st Dept 2005] [fact that five of nine defendants were German residents was entitled to substantial weight in [*8]forum non conveniens analysis]). Where no party-in-interest is a resident of New York, MHC should not have to suffer the burden and expense of having to litigate here (see Wentzel v Allen Mach., Inc., 277 AD2d 446 [2d Dept 2000] [burden on defendants to travel 3000 miles to New York to defend action favored dismissal]; Neuter, Ltd. v Citibank, N.A., 239 AD2d 213 [1st Dept 1997] [expense defendant would incur in transporting documents and witnesses from Switzerland to New York favored dismissal]).
The fact that CGM is a New York resident does not require a different analysis. CPLR 327 (a) explicitly provides that the residence in New York of a party does not preclude the court from dismissing an action. Thus, even when a plaintiff with an interest in the dispute which CGM is not is a New York resident, New York courts will dismiss cases on forum non conveniens grounds where there is a limited connection between the other parties and the forum, as is the case here (see Silver v Great Am. Ins. Co., 29 NY2d 356, 361 [1972] ["Although such residence is, of course, an important factor to be considered, forum non conveniens relief should be granted when it plainly appears that New York is an inconvenient forum and that another is available which will best serve the ends of justice and the convenience of the parties"]; Blueye Navigation, Inc. v Den Norske Bank, 239 AD2d 192 [1st Dept 1997] [dismissal on forum non conveniens grounds proper even though one or more of the plaintiffs resided in New York, since all of the defendants were foreign, and all other factors pointed toward England as the appropriate forum]). Here, the basis for staying or dismissing this case on forum non conveniens grounds is particularly strong, given that CGM, the only New York resident party to this action, is not a real party in interest.
Adequate Alternative Forum
Although the availability of an alternative forum is not a "prerequisite" to forum non conveniens dismissal, New York courts consider it a "most important factor" (Islamic Republic of Iran v Pahlavi, 62 NY2d at 481). The dispute between MHC and Amir over the ownership and control of MHC and the validity of the Arbitration Agreement is already the subject of ongoing litigation in a Swiss arbitration, in England, and in the Bahamas. The pendency of these actions weighs heavily in favor of dismissal on forum non conveniens grounds (see Brooke Group Ltd. v JCH Syndicate 488, 87 NY2d 530 [1996] [affirming forum non conveniens dismissal where an arbitration had already been instituted in London and the dispute involved two foreign corporations]; Serano Ltd. v Canadian Imperial Bank of Commerce, 287 AD2d 309 [1st Dept 2001] [pending action in Taiwan covering same disputed transactions favored dismissal]).
New York courts also routinely dismiss cases on forum non conveniens grounds where there is a prior related litigation pending in a foreign jurisdiction, because of the undue burden this would place on New York courts, and the risk of conflicting results (World Point Trading PTE v Credito Italiano, 225 AD2d at 161 [dismissing on forum non conveniens grounds in part due to "attendant risk that conflicting rulings might be issued by courts of two jurisdictions" where a case was already pending in Italy]; see also A&M Exports, Ltd. v Meridien Intl. Bank, Ltd., 207 AD2d 741, supra).
The gravamen of Amir's cross claim in this litigation is that he is entitled to the assets in the CGM account. Thus, for Amir to prevail here, he must essentially litigate the merits of the issue of the ownership of MHC, which issue is already being litigated in the Swiss arbitration and the Bahamian lawsuit. Consequently, allowing this action to proceed in New York would result in a wasteful and expensive duplication of effort, and require this Court to address the merits of ongoing foreign litigations.
Location of Witnesses and Relevant Documents
[*9]
Courts have long taken into account the severity of the burden on defendants in being forced to defend themselves in New York when determining a forum non conveniens motion (see Islamic Republic of Iran v Pahlavi, 62 NY2d 474, supra [dismissing case where, among other factors, defendant could not defend against the claim in any realistic way because of the location of witnesses and documents, which were not subject to the mandate of the New York court]; Zelouf v Republic Natl. Bank of New York, 225 AD2d 419 [1st Dept 1996] [upholding trial court's dismissal where relevant witnesses and documents were located in London]). Thus, the location of documents and witnesses is an important factor in determining a forum non conveniens motion (see Shin-Etsu Chem. Co., Ltd. v ICICI Bank Ltd., 9 AD3d 171 [1st Dept 2004]).
The documents and records relevant to the ownership of MHC are located in the Bahamas, as are the documents related to the validity of the Arbitration Agreement (First Graham Aff., ¶ 9). Similarly, the witnesses with knowledge about the events directly bearing on the ownership of the assets, including Amir, Davis, Rounce and the lawyer that set up the Liechtenstein foundation that Amir now says owns MHC, as well as witnesses with knowledge of the Arbitration Agreement, are located in England, Liechtenstein or the Bahamas, but not in the United States (id.). Under these circumstances, dismissal on forum non conveniens grounds is appropriate (see Shiboleth v Yerushalmi, 268 AD2d 300 [1st Dept 2000] [claims should be decided in Israel since, among other things, most of the witnesses were located there]; Blueye Navigation, Inc. v Den Norske Bank, 239 AD2d 192, supra [the fact that the bulk of evidence and witnesses needed to defend action were in London weighed in favor of dismissal]; World Point Trading PTE v Credito Italiano, 225 AD2d 153, supra [fact that two witnesses with personal knowledge were located in Italy was a factor in the decision to dismiss on forum non conveniens]; Evdokias v Oppenheimer, 123 AD2d 598, supra [the location of a substantial majority of witnesses and documents in Quebec warranted dismissal]).
Although Amir contends that "much of the evidence relating to this dispute ... is likely located in New York" (Amir Mem of Law, at 10), this contention is completely without merit. While it may be true that a few documents and letters involving the technical aspects of the transfer of the assets from one account to another are located in New York, that is only one very small part of the relevant evidence here. Virtually all of the voluminous evidence on the real issue, the rightful ownership of MHC, is located abroad, including witnesses who would be called to testify about that ownership. Indeed, nearly all of the documents that Amir seeks in his document requests are located in the Bahamas, or in England. For example, all minutes of the meetings of shareholders and directors of MHC, and all share certificates, are in the Bahamas; documents relating to the relationship and dealings between MHC and Rounce, Davis and Amir are in the Bahamas; and the vast bulk of documents supporting MHC's contentions that it is the owner of the assets are in the Bahamas. Davis, whom Amir seeks to depose, is a resident of the Bahamas. Accordingly, this factor favors dismissal as well.
Applicability of Foreign Law
"The applicability of foreign law is an important consideration in determining a forum non conveniens motion," and weighs against retention of the action (Shin-Etsu Chem. Co., Ltd. v ICICI Bank Ltd., 9 AD3d at 178 [reversing denial of forum non conveniens motion]). For this reason, New York courts commonly dismiss actions that may require interpretation of foreign law (see e.g. Islamic Republic of Iran v Pahlavi, 62 NY2d at 480 ["likely applicability of Iranian law" supports dismissal on forum non conveniens grounds]; Tilleke & Gibbins Intl., Ltd. v Baker & McKenzie, 302 AD2d 328 [1st Dept 2003] [holding that action involving Thai evidence and [*10]applying Thai law would be inordinate burden upon a New York court]; Neuter, Ltd. v Citibank, N.A., 239 AD2d 21, supra [dismissing action to Sweden where, inter alia, court would be required to apply Swiss law, and expert testimony would be required]; Davidson Extrusions, Inc. v Touche Ross & Co., 131 AD2d 421 [2d Dept 1987] [dismissing action because, inter alia, Cypriot law was applicable to the dispute]; PT United Can Co. Ltd. v Crown Cork & Seal Co., 1997 WL 31194 [SD NY 1997], affd 138 F3d 65 [2d Cir 1998] [dismissing action because, inter alia, Indonesian law was likely to apply to the dispute]).
Here, New York law has virtually nothing to do with the issues in this action. In the Arbitration Agreement, the parties agreed that Swiss law would govern the Agreement itself. If for some reason this law does not apply, it is possible that Bahamian law, the law of MHC's incorporation, would be relevant to a determination of the ownership of the assets. In any event, there can be no doubt that New York law is irrelevant to this dispute. Thus, the applicable law weighs in favor of dismissal on grounds of forum non conveniens.
Upon balancing the appropriate factors, MHC has sustained its burden of showing that the end of justice and the convenience of the parties will be best served if this action is heard abroad. Accordingly, MHC's motion for dismissal on the ground of forum non conveniens is granted. In light of this determination, CGM's cross motion for discharge is denied as moot, as well as MHC's alternative motions for dismissal on the grounds of prior action pending, and failure to state a claim, MHC's motion for an order permitting the disputed assets to be placed in an escrow account, and MHC's motion for an order sealing the court records in this action.
The Court has considered the remaining claims, and finds them to be without merit.
Accordingly, it is
ORDERED that defendant Metals Holding Corporation's motion to dismiss on the ground of forum non conveniens (Motion Sequence No. 002) is granted, and the complaint is dismissed with costs and disbursements to Metals Holding Corporation as taxed by the Clerk of the Court; and it is further
ORDERED that the remaining branches of Metal Holding Corporation's motion are denied as moot; and it is further
ORDERED that the cross motion of plaintiff Citigroup Global Markets, Inc. for a discharge is denied as moot; and it is further
ORDERED that Metal Holding Corporation's motion for an order sealing the court
records in this action (Motion Sequence No. 001) is denied as moot; and it is further
ORDERED that the Clerk is directed to enter judgment accordingly.
Dated: ___________
ENTER
______
_______________________
J.S.C.
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