14 F. Supp. 3d 463
S.D.N.Y.2014Background
- Plaintiffs (Brazilian pig-iron producers) obtained a $48M+ ICC arbitration Award in Paris against Steel Base Trade AG (SBT) for breach of supply contracts. SBT later became insolvent and transferred major assets to Prime Carbon and related AMCI entities controlled by Mende and Kundrun.
- Plaintiffs allege Defendants are SBT’s alter egos or successors-in-interest and that the asset transfers were fraudulent, leaving SBT unable to satisfy the Award. Plaintiffs sued in U.S. federal court to enforce the Award against those entities and individuals.
- The ICC Tribunal admitted Plaintiffs’ claims against SBT and issued the Award in November 2011 but declined to find fraud or pierce the corporate veil as part of the arbitration. Plaintiffs were unable to collect from SBT.
- Defendants moved to dismiss under Rules 12(b)(1),(2),(3),(6) and doctrines including forum non conveniens and international comity. Defendants also argued the court lacks authority to modify or reach beyond the foreign award.
- The District Court treated the matter as an enforcement action under the New York Convention (secondary jurisdiction because the Award was made in Paris) and evaluated whether alter-ego/successor or fraud claims could be decided in this confirmation/enforcement proceeding.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court may enforce the Paris ICC Award against Defendants as alter egos/successors of SBT | Plaintiffs: Defendants dominated SBT and transferred assets to Prime Carbon; enforcement against alter egos is permitted in confirmation/enforcement proceedings | Defendants: Determination of successor/alter-ego is factually complex and would amount to impermissible modification of a foreign award in secondary jurisdiction | Dismissed: enforcement claim against alter egos/successors (First Cause) dismissed because Award was unconfirmed in any competent court and the complex factual inquiry is inappropriate in this secondary-jurisdiction enforcement action |
| Whether Plaintiffs can relitigate fraud/fraudulent-transfer claims previously presented to the ICC Tribunal | Plaintiffs: fraud and veil-piercing were alleged and relief is necessary to reach assets now held by Prime Carbon/others | Defendants: ICC Tribunal considered related allegations and declined to find fraud; relitigation here would impermissibly modify or relitigate the foreign award | Dismissed: Second–Sixth Causes (fraud, conspiracy, fraudulent transfer, aiding/abetting) barred because Plaintiffs raised these issues before the ICC and Tribunal did not grant such relief |
| Whether secondary-jurisdiction court can modify or revisit merits of foreign arbitral award under New York Convention | Plaintiffs: seek enforcement remedies against nonparty successors/alter egos without modifying award | Defendants: court lacks power to modify award or make substantive findings that effectively change outcome of arbitral proceedings | Held for Defendants: court in secondary jurisdiction may enforce but not modify the award; extensive successor/alter-ego factfinding is generally inappropriate in confirmation proceedings |
| Whether dismissal of these claims requires resolving personal jurisdiction, venue, forum non conveniens, comity, and due process defenses | Plaintiffs: argue subject-matter basis for enforcement and that U.S. forum appropriate | Defendants: raised personal jurisdiction and forum defenses | Court: Did not reach those defenses because it dismissed on other grounds; left jurisdictional issues unresolved pending repleading |
Key Cases Cited
- Telenor Mobile Commc’ns AS v. Storm LLC, 584 F.3d 396 (2d Cir. 2009) (describing court duties under New York Convention enforcement)
- Encyclopaedia Universalis S.A. v. Encyclopaedia Britannica, Inc., 403 F.3d 85 (2d Cir. 2005) (Article V sets exclusive defenses to recognition/enforcement)
- Yusuf Ahmed Alghanim & Sons, W.L.L. v. Toys "R" Us, Inc., 126 F.3d 15 (2d Cir. 1997) (limited review of arbitral awards and role of primary vs. secondary jurisdiction)
- Karaha Bodas Co., L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 500 F.3d 111 (2d Cir. 2007) (distinguishing primary jurisdiction of the state where award was made)
- Orion Shipping & Trading Co. v. Eastern States Petroleum Corp., 312 F.2d 299 (2d Cir. 1963) (confirmation proceedings are poor vehicles for fact‑intensive alter‑ego inquiries)
- Monegasque De Reassurances S.A.M. v. Nak Naftogaz of Ukr., 311 F.3d 488 (2d Cir. 2002) (theories for binding nonsignatories, including veil‑piercing)
- Productos Mercantiles E. Industriales, S.A. v. Faberge USA, Inc., 23 F.3d 41 (2d Cir. 1994) (successor‑in‑interest enforcement may be appropriate where facts are straightforward)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard for plausibility)