ADRU Tech Ltd. v. DS Games Inc.
Filing
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MEMORANDUM OPINION. Signed by Judge Maryellen Noreika on 1/28/2025. (dlw)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
ADRU TECH LTD.,
Peitioner,
v.
DS GAMES, INC.,
Respondent.
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C.A. No. 24-901 (MN)
MEMORANDUM OPINION
Carl N. Kunz, III, Eric J. Monzo, Ryan E. Carreon, MORRIS JAMES LLP, Wilmington, DE –
Attorneys for Petitioner
January 28, 2025
Wilmington, Delaware
NOREIKA, U.S. DISTRICT JUDGE
Presently before the Court is Plaintiff’s Petition to Confirm Arbitration Award (D.I. 1) and
Plaintiff’s Motion for Entry of Default Judgment (D.I. 8). As discussed below, the Court will
confirm the Arbitration Award and enter default judgment as requested.
I.
FACTUAL BACKGROUND
Petitioner ADRU Tech Ltd. is organized under the laws of the Republic of Cyprus. (D.I. 1
¶ 1). Respondent DS Games Inc. is a Delaware corporation. (Id. ¶ 2). On or about April 7, 2022,
DS Games entered into a Convertible Loan Agreement (“the Agreement”) with ADRU in the
amount of $600,000. (D.I. 1, Ex. B; D.I. 8-1 ¶ 2). The Agreement contained an arbitration
provision which states that:
Any dispute, controversy, difference or claim arising out of or
relating to this contract, including the existence, validity,
interpretation, performance, breach or termination thereof or any
dispute regarding non-contractual obligations arising out of or
relating to it shall be referred to and finally resolved by arbitration
administered by the Hong Kong International Arbitration Centre
(HKIAC) under the HKIAC Administered Arbitration Rules in force
when the Notice of Arbitration is submitted. The seat of arbitration
shall be Hong Kong. The number of arbitrators shall be one. The
arbitration proceedings shall be conducted in English language.
(D.I. 1, Ex. B ¶6.1; D.I. 8-1 ¶ 2).
On March 2, 2023, ADRU commenced arbitration proceedings against DS Games for
default of its payment obligations under the Agreement. (D.I. 1 ¶ 12; D.I. 1, Ex. A ¶11). The
arbitration proceeding (“the Arbitration”) was initiated through the Hong Kong International
Arbitration Centre (“HKIAC”). (D.I. 8 ¶ 3). As part of the Arbitration findings, the arbitrator
confirmed that ADRU had couriered hard copies of the relevant submissions and correspondence
to DS Games and provided adequate proof thereof. (D.I. 8-1 ¶ 5; D.I. 1-1 ¶57). The arbitrator
also directly sent correspondence to DS Games via the email address dr@qrmobi.com during the
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course of the proceedings. (Id.). Ultimately, the arbitrator concluded that DS Games “has been
duly notified of the commencement and the progress of this arbitration.”
(Id.).
On
March 21, 2024, the arbitrator issued her decision (“the Final Award”) (1) confirming jurisdiction
to determine the dispute; (2) ordering DS Games to pay ADRU the amount of USD 805,496 within
14 days; (3) ordering DS Games to pay ADRU interest on the amount of USD 600,000 at a rate of
1% compounded and accrued every one month from May 26, 2022, until January 10, 2023;
(4) ordering DS Games to pay ADRU interest on the amount of USD 600,000 at the rate of 8.5%
per annum from January 11, 2023, until payment in full of the award; (5) ordering DS Games to
pay ADRU interest on the amount of USD 205,496.82 at a rate of 8.5% per annum from
December 15, 2022, until payment in full of the award; (6) ordering DS Games to pay HKD
158,860.50 and EUR 8,000 for the overall arbitration costs incurred within 14 days; and
(7) rejecting all other claims. (See D.I. 1, Ex. A).
On July 31, 2024, ADRU filed a Petition to Confirm Foreign Arbitration Award in this
Court. (D.I. 1). On August 2, 2024, DS Games was served with a Summons and a copy of the
Petition through its Delaware registered agent. (D.I. 4). DS Games did not respond. On
September 13, 2024, the Clerk entered Default against DS Games for failure to appear or otherwise
defend. (D.I. 7). Since the issuance of the Final Award, DS Games has not challenged the validity
or existence of the arbitration provision, and no other basis to deny confirmation of the Final
Award exists.
II.
LEGAL STANDARDS
A party seeking to obtain a default judgment, pursuant to Federal Rule of Civil Procedure
55(b)(2), must first request that the Clerk of the Court enter the default of the party that has not
answered or otherwise defended against the pleading within the time required by the rules or as
extended by court order, pursuant to Federal Rule of Civil Procedure 55(a). ADRU has satisfied
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this requirement. Thereafter, with the filing of a motion for default judgment, “the entry of a
default judgment is left primarily to the discretion of the district court,” but “discretion is not
without limits,” and the preference is for cases to “be disposed of on the merits whenever
practicable.” Hritz v. Woma Corp., 732 F.2d 1178, 1180-81 (3d Cir. 1984). “[I]n exercising its
discretion, the trial court must consider three factors: (1) whether the plaintiff will be prejudiced
if the default is lifted; (2) whether the defendant has a meritorious defense; and (3) whether the
default was the result of the defendant’s culpable misconduct.” Id. at 1181. It should be noted,
however, that when a defendant has failed to appear or respond in any fashion to the complaint or
petition, this analysis is necessarily one-sided; entry of default judgment is typically appropriate
in such circumstances at least until the defendant comes forward with a motion to set aside the
default judgment pursuant to Rule 55(c).” Mount Nittany Medical Center v. Nittany Urgent Care,
P.C., 2011 WL 5869812, at *1 (M.D.Pa. Nov. 22, 2011), citing Anchorage Assocs. v. Virgin Is.
Bd. of Tax Rev., 922 F.2d 168, 177 n.9 (3d Cir. 1990
III.
DISCUSSION
A.
The Arbitration Award Is Enforceable
The New York Convention, as implemented by Chapter 2 of the Federal Arbitration Act
(“FAA”), permits the recipient of a foreign arbitration award to petition a district court to enforce
it. See 9 U.S.C. §§ 201-208. Petitions to confirm an arbitration award are addressed through
summary proceedings, which dispense with certain formalities including the pleading standards
set in the Federal Rules of Civil Procedure which are inapplicable to FAA proceedings. See PG
Publ’g, Inc. v. Newspaper Guild of Pittsburgh, 19 F.4th 308, 313 (3d Cir. 2021). Pursuant to the
FAA, a court “shall confirm” a foreign arbitration award falling under the New York Convention
“unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the
award specified in the . . . Convention.” Jiangsu Beier Decoration Materials Co. v. Angle World
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LLC, 52 F.4th 554, 560 (3d Cir. 2022) quoting 9 U.S.C. § 207. An opposing party seeking to
prevent confirmation of a foreign arbitration award bears a heavy burden, as arbitration awards are
subject to an “extremely deferential” standard for review. Dluhos v. Strasberg, 321 F.3d 365, 370
(3d Cir. 2003). Indeed, a court must enforce an arbitration award unless there is “absolutely no
support at all in the record justifying the arbitrator’s determinations.” United Transp. Union Loc.
1589 v. Suburban Transit Corp., 51 F.3d 376, 379 (3d Cir. 1995) (internal quotations and citation
omitted).
Here, ADRU has demonstrated that the Court should confirm the Final Award. First, the
copy of the Final Award that had been certified by the HKIAC on July 25, 2024 confirms that the
arbitration petition was served on DS Games by email, that ADRU couriered hard copies of the
relevant submissions and correspondence to DS Games and that the Arbitrator also directly sent
correspondence to DS Games during the course of the proceedings. (D.I. 1, Ex. A ¶¶ 13, 14, 57).
In short, the Arbitrator concluded that DS Games “has been duly notified of the commencement
and the progress of this arbitration.” (Id. ¶ 57). Second, ADRU provided a copy of its Agreement
with DS Games, executed by both ADRU and DS Games via DocuSign, which includes the
arbitration provision quoted supra. (D.I. 8-1 ¶ 17).
B.
Entry of Default Judgment Is Appropriate
All of the factors the Court should consider weigh in favor of entering a default judgment
in favor of ADRU and against DS Games. ADRU would be substantially prejudiced if default
judgment were not entered. ADRU initiated arbitration more than one year ago, and the delinquent
payments under the Agreement became due almost two years ago. Absent an enforceable
judgment, ADRU is not likely to recover from DS Games any of the money to which it is entitled.
Nor does it appear that DS Games has a litigable defense. The Final Award was filed on
March 21, 2024. (D.I. 1, Ex A). The Clerk of Court entered default against DS Games more than
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three months ago, on September 13, 2024. (D. I. 7). Since then, DS Games has done nothing.
Indeed, to date, DS Games has wholly ignored this case, asserting no defense, let alone a
meritorious one, nor has it taken any other action to indicate its intent to participate in these
proceedings.
Thus, the Court will enter default judgment against DS Games after having
confirmed the Final Award.
IV.
CONCLUSION
For the reasons stated, the Court grants Plaintiff’s Petition to Confirm Arbitration Award
(D.I. 1) and confirms the Arbitration Award and grants Plaintiff’s Motion for Default Judgment
(D.I. 8). An appropriate order will follow.
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