555 B.R. 323
Bankr. S.D.N.Y.2016Background
- Hellas Telecommunications (Luxembourg) II SCA (Hellas II) is in compulsory liquidation in the U.K.; foreign representatives obtained Chapter 15 recognition in the U.S. and filed an adversary proceeding (March 2014) to avoid and recover transfers tied to a December 2006 CPEC redemption and related transactions.
- Plaintiffs amended to assert U.K. avoidance claims (Sections 213 and 423 Insolvency Act) after New York-law avoidance claims were dismissed; some foreign defendants previously were dismissed from the U.S. action for lack of personal jurisdiction.
- Plaintiffs filed a parallel U.K. action (Nov. 26, 2015) against nine defendants previously dismissed in the U.S.; subsequently all named defendants consented to jurisdiction in the U.K. and agreed U.S. discovery could be used there.
- Defendants moved to dismiss on forum non conveniens grounds (Jan. 2016). Plaintiffs opposed, raising prejudice (class of ~600 unnamed U.S. transferees), reliance on extensive U.S. discovery, and delay arguments.
- The bankruptcy court evaluated Chapter 15 purposes (international comity/cooperation), the Second Circuit three-step forum non conveniens test, and the changed circumstances (existence of the U.K. suit and consent of defendants).
- Court granted the forum non conveniens motion but stayed (rather than dismissed) subject to conditions: defendants must consent to U.K. jurisdiction and service, waive certain statute-of-limitations defenses, permit use of U.S. discovery in the U.K. Action, waive challenges regarding absent Transferee Class members, and use reasonable efforts to produce U.S.-resident employee witnesses for U.K. trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper deference to Plaintiffs’ choice of forum | Plaintiffs (U.K. foreign representatives) urged substantial deference and relied on law-of-the-case (Hosking III). | Defendants argued little or no deference because plaintiffs are foreign and U.K. is more convenient; also directed to change in circumstances. | Court gave little deference to plaintiffs’ choice given foreign plaintiff status and changed circumstances (U.K. Action). |
| Adequacy of alternative forum (U.K.) | Plaintiffs: U.K. forum inadequate for unnamed U.S. Transferee Class members; risk of prejudice and uncertain use of U.S. discovery. | Defendants: U.K. is adequate because all named defendants consent to jurisdiction and the U.K. permits the asserted claims; discovery may be used there. | Court held U.K. is an adequate (indeed superior) alternative forum as to named defendants; class issues were speculative and unlikely to defeat dismissal. |
| Balance of private and public interest factors | Plaintiffs: extensive U.S. discovery, delay by defendants, multinational facts mean no single local forum; applying U.K. law in U.S. is feasible. | Defendants: parallel U.K. action, most witnesses/documents in U.K., U.K. has stronger interest and expertise on its insolvency law; avoiding parallel inconsistent judgments favors U.K. | Court concluded the public and private factors weigh in favor of U.K.: avoid applying unsettled U.K. law here; avoid parallel trials and inconsistent results. |
| Appropriate remedy (dismissal vs. stay) | Plaintiffs sought to remain in U.S.; challenged prejudice of dismissal. | Defendants accepted a stay as alternative to dismissal, with conditions preserving the ability to pursue enforcement in U.S. if U.K. judgment obtained. | Court granted forum non conveniens relief but entered a conditional STAY (not dismissal) to respect Chapter 15 and avoid jurisdictional final-order issue; enumerated conditions for defendants’ consent/use of discovery/statutes-of-limitations waivers. |
Key Cases Cited
- Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88 (2d Cir.) (standard for forum non conveniens analysis in this Circuit)
- Iragorri v. United Techs. Corp., 274 F.3d 65 (2d Cir.) (three-step forum non conveniens framework and deference analysis)
- Norex Petroleum Ltd. v. Access Indus., Inc., 416 F.3d 146 (2d Cir.) (factors for deference to plaintiff’s forum choice and forum-shopping indicators)
- Piper Aircraft Co. v. Reyno, 454 U.S. 235 (U.S. 1981) (adequate alternative forum principle)
- Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (U.S. 1947) (public and private interest factors for forum non conveniens)
- Alfadda v. Fenn, 159 F.3d 41 (2d Cir.) (weight given to extent of discovery and litigation invested when considering dismissal)
- DiRienzo v. Philip Servs. Corp., 232 F.3d 49 (2d Cir.) (defendant’s submission to foreign jurisdiction generally satisfies amenability)
- Abdullahi v. Pfizer, Inc., 562 F.3d 163 (2d Cir.) (forum non conveniens dismissal requires factors tilt strongly toward foreign forum)