Figueiredo Ferraz Consultria v. Republic of Peru, 08 Civ. 492(WHP).

655 F.Supp.2d 361

FIGUEIREDO FERRAZ CONSULTRIA E ENGENHARIA DE PRJETO LTDA., Plaintiff, v. The REPUBLIC OF PERU et al., Defendants.

No. 08 Civ. 492(WHP).

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

September 8, 2009.

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Thomas Joseph Hall, Esq., Chadbourne & Parke LLP, New York, NY, for Plaintiff.

Juan C. Basombrio, Esq., Dorsey & Whitney LLP, Irvine, CA, for Defendants.

MEMORANDUM & ORDER

WILLIAM H. PAULEY III, District Judge.

Plaintiff Figueiredo Ferraz Consultoria E Engenharia de Projeto Ltda. ("Figueiredo") brings this action to confirm an arbitration award of $21,607,003 against the Republic of Peru (the "Republic"), the Ministerio de Vivienda, Construccion y Saneamiento (the Ministry of Housing, Construction and Sanitation of the Republic) (the "Ministry"), and the Programa Agua Para Todos ("PAPT"). PAPT is the successor to Programa de Apoyo a la Reforma Del Sector Saneamiento ("PARSSA"), which itself was formerly known as Proyecto Especial Programa Nacional de Agua Potable y Alcantarillado ("PRONAP").¹ Figueiredo claims it is entitled to enforce the arbitration award pursuant to the Inter-American Convention on International Commercial Arbitration (the "Inter-American Convention"), under the Federal Arbitration Act, 9 U.S.C. § 301 et seq. ("FAA"), or alternatively, pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention").

Defendants move to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(2) and 12(b)(6), and on the grounds that the Court should decline jurisdiction under the doctrine of forum non conveniens, or for reasons of international comity. For the following reasons, Defendants' motion is denied.

BACKGROUND

I. The Agreement and Award

Figueiredo is a Brazilian corporation. (Amended Complaint dated Jan. 22, 2009 ("Am. Compl.") ¶ 2). On November 12, 1997, Figueiredo entered into a consulting agreement with the Program (the "Agreement") for engineering studies on water and sewage services in Peru. (Am. Compl. ¶ 13, Ex. H: English translation of the Agreement.) The Agreement provides: "The parties agree to subject themselves to the competence of the Judges and Courts of the City of Lima or the Arbitration Proceedings, as applicable." (Am. Compl. Ex. ¶ at 17.) Following a fee dispute, Figueiredo commenced arbitration in Peru pursuant to the Agreement. (Am. Compl. ¶ 19.) On January 20, 2005, a Peruvian arbitral tribunal rendered its award, directing the Program to pay Figueiredo $21,607,003 (the "Award"). (Am. Compl. ¶ 23.) On February 18, 2005, the Ministry filed an "appeal for nullity against [the Award]," in the Court of Appeals in and for Lima, First Civil Division (the "Peruvian Court") challenging the Award. (Am. Compl. ¶ 24, Ex. L: The Peruvian Court Decision at 8.) On October 5, 2005, the Peruvian Court dismissed that challenge. (Am. Compl. 24.) Under Peruvian law, the decision of the Peruvian Court is final and cannot be appealed. (Am. Compl. ¶ 24.)

To the present, the Ministry has paid $1,414,884 toward the Award—the statutory 3% cap of the Program's operating budget. (Declaration of Julio Cesar Alcantara Meza dated Apr. 23, 2009 ("Meza Decl.") ¶¶ 9-10, 15.) In correspondence with the Peruvian Minister of Economy and Finance, the Ministry concedes that the Award "established [its] obligation ... to cancel considerable sums of money," and bestowed upon the Ministry of Economy and Finance "the full responsibility ... for the final solution of the payment of [the Award]." (Am. Compl. Ex. F: Letter from the Ministry to Luis Carranza Ugarte, Minister of Economy and Finance, dated Aug. 14, 2007 at 11, 16.)

II. Defendants' Contacts With New York

The Republic is in the process of issuing $5 billion in debt securities in the United States. (Declaration of Thomas J. Hall dated Apr. 23, 2009 ("Hall Decl.") ¶ 2.) On December 12, 2008, the Republic filed a Registration Statement with the Securities and Exchange Commission ("SEC") (the "December 2008 Registration Statement"). (Hall Decl. ¶ 2.) According to the December 2008 Registration Statement: the Republic will maintain a paying agent and registrar in New York until the notes issued are fully paid; the Republic will appoint a New York corporation as its agent for process and consents to jurisdiction in New York state and federal courts in connection with the issuance; the debt securities will be governed by New York law; the Republic is represented by a New York law firm; the Republic's authorized United States representative is an individual in the Peruvian Consulate General in New York; and the debt securities will be issued in the form of global notes, to be held by a New York trust company. (Hall Decl. ¶¶ 2(a)-(f).)

On March 30, 2009, the Republic issued $1 billion of U.S. Dollar denominated Global Bonds. (Hall Decl. 113.) A March 25, 2009 Prospectus Supplement describes the Republic's contacts with New York, in virtually identical terms to those set out in the December 2008 Registration Statement. (Hall Decl. ¶¶ 3(a)-(f).)

In addition to the December 2008 Registration Statement, the Republic filed registration statements in December 2006, January 2005, November 2003, January 2003, and November 2002, in connection with the issuance of approximately $13 billion in other debt securities. (Hall Decl. 114.) Each of those, registration statements described contacts with New York like those contacts set forth in the December 2008 Registration Statement. (Hall Decl. ¶¶ 4(a)-(f).) Finally, in September 2002, the Republic filed a Registration Statement concerning an exchange of "Global Bonds" for "Exchange Bonds" that enumerated similar details about the Republic's contacts with New York. (Hall Decl. 115.)

DISCUSSION

I. Defendants' 12(b)(6) Motion

A. Legal Standard

The Republic and the Ministry argue that this Court cannot confirm the Award against them because they were not signatories to the Agreement. Figueiredo counters that the Ministry and the Program are political subdivisions of the Republic.

On a motion to dismiss, a court must accept the material facts alleged in the complaint as true and construe all reasonable inferences in plaintiffs favor. Grandon v. Merrill Lynch & Co., 147 F.3d 184, 188 (2d Cir.1998). Nonetheless, "factual allegations must be enough to raise a right of relief above the speculative level, on the assumption that all of the allegations in the complaint are true." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (requiring plaintiff to plead "enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of [his claim]"). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, ___ U.S. ___, ___, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). "The plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 129 S.Ct at 1949 (citation omitted). A court's "consideration [on a motion to dismiss] is limited to facts stated on the face of the complaint, in documents appended to the complaint or incorporated in the complaint by reference, and to matters of which judicial notice may be taken." Allen v. WestPoint-Pepperell, Inc., 945 F.2d 40, 44 (2d Cir. 1991). In addition, under Federal Rule of Civil Procedure 44.1, this Court may make determinations regarding foreign law by considering "any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence." Fed.R.Civ.P. 44.1.²

B. The Legal Status of the Program

In Compagnie Noga D'Importation et D'Exportation S.A. v. Russian Federation, 361 F.3d 676, 677 (2d Cir.2004) ("Noga"). the Second Circuit held that an "arbitration award can be confirmed and enforced against a sovereign nation [even] where the arbitration agreement was signed by an organ of that nation's central government and where that organ—and not the nation itself—participated in the underlying arbitration proceedings." The Court of Appeals described the central inquiry as whether "the [signatory to the arbitration agreement was] an instrumentality established as a juridical entity distinct and independent from the [sovereign]," Noga, 361 F.3d at 685, or a political organ of the sovereign nation, Noga, 361 F.3d at 688.

Thus the question here is whether the Program is an instrumentality established as a juridical entity distinct and independent from the Republic, or whether it is a political organ of the Republic. See Noga, 361 F.3d at 685. If the Program is a political organ, then there is no meaningful legal distinction between it and the Republic for confirmation of the Award. See Noga, 361 F.3d at 688.

1. Peruvian Law

Applying Noga, this Court turns first to Peruvian law to determine whether the Program and the Republic should be treated as separate parties for purposes of this action. See Noga, 361 F.3d at 685. Defendants offer the declaration of a Peruvian attorney and university professor, setting forth the relevant provisions of Peruvian law. Plaintiff offers its own foreign law expert declaration in opposition, which Defendants seek to preclude. Pursuant to Rule 44.1 this Court makes the following rulings as to Peruvian law. See Fed.R.Civ.P. 44.1 ("In determining foreign law, the court may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence. The court's determination must be treated as a ruling on a question of law.").

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