ALLIANCE INDUSTRIES LIMITED v. A-1 SPECIALIZED SERVICES & SUPPLIES, INC.
MEMORANDUM AND OPINION. SIGNED BY HONORABLE MICHAEL M. BAYLSON ON 3/12/14. 3/12/14 ENTERED & E-MAILED.(fdc)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
ALLIANCE INDUSTRIES LIMITED
ALLIANCE INDUSTRIES FZC
A-1 SPECIALIZED SERVICES &
March 12, 2014
MEMORANDUM RE: DEFENDANT’S MOTION TO DISMISS OR STAY PURSUANT
TO PRINCIPLES OF INTERNATIONAL COMITY AND THE
DOCTRINE OF FORUM NON CONVENIENS
This case presents a $70 million international dispute among three companies owned by
four family members, arising out of eleven leases for precious metals. Plaintiffs and Defendant
are parties to a Settlement Agreement regarding the transfer of shares in the companies. The
Settlement Agreement contains a release of claims provision that is currently the subject of a
pending action in England. Defendant moves to stay or dismiss Plaintiffs’ Second Amended
Compliant for reasons of international comity or forum nonconveniens. Defendant argues that
this action should be dismissed in favor of the English action, or stayed pending its outcome,
because all of the parties to this case are parties to the English action. Plaintiff contends that the
Settlement Agreement has no bearing on the leases, so the outcome of the English action
construing the Settlement Agreement would not resolve this dispute.
This preface may seem similar to the plot of a Wagner opera, of a Dickens novel, or
merely a law school exam question. In the absence of any recent Third Circuit guidance on the
forum nonconveniens issue in an international context, the Court will weigh concepts as ethereal
as fairness and as concrete as discovery.
Plaintiff Alliance Industries Limited (Limited) is a company that buys, sells, markets and
trades precious metals, and lends or leases its inventory of metals. Second Amended Complaint
(SAC) at ¶ 7. Limited is incorporated under the laws of Gibraltar with its principal place of
business in the United Arab Emirates and is owned entirely by Ashok Kumar Khosla (Kumar).
SAC at ¶ 2. Co-plaintiff Alliance Industries FZC (FZC) is also involved in trading and marketing
precious metals, and is owned 50% by Kumar and 50% by his brother Suresh Khosla (Suresh).
SAC at ¶ 3. FZC is incorporated under the laws of the Sharjah Airport International Free Zone
of the United Arab Emirates, which is also its principal place of business. SAC at ¶ 3.
The Second Amended Complaint alleges that Kumar is the General Manager and
Director of FZC, which Defendant does not dispute. 1 SAC at ¶ 9. Kumar and Suresh both reside
in Mooresville, New Jersey, and assert that is where they store FZC and Limited corporate
records, which are relevant to this case. (ECF No. 34).
Defendant A-1 Specialized Services & Supplies (A-1) also markets and sells commoditygrade precious metals, and processes salvage automotive catalytic converters. (ECF No. 34-1).
A-1 is owned by three brothers, Kumar Khosla, Suresh Khosla, and Om Khosla, and Suresh’s
wife Leena Khosla. 2 Stipulation at ¶ 4. A-1 is incorporated in Pennsylvania, which is also its
principal place of business. Stipulation at ¶ 4.
Defendant did dispute this assertion in its opposition to Plaintiff’s Motion to Amend its First Amended Complaint.
(ECF No. 22).
It is unclear from the pleadings, appended documents and stipulations what percentage of ownership each holds in
A. Issues in this Case
This dispute relates to eleven lease agreements for the lease of platinum and palladium, a
precious metal used in catalytic converters. Stipulation at ¶ 1. Plaintiffs seek damages for
breach of eleven lease agreements for precious metals, alleging A-1 failed to return the leased
metals to Plaintiffs and failed to pay interest owed under the lease agreements. SAC at ¶ 1. The
first six lease agreements, dated between April 24, 2011 and January 18, 2012, were between
FZC and A-1, “with the metal provided by Limited.” SAC at ¶¶ 12-13. The other five lease
agreements were between Limited and A-1 directly, and were signed between February 6, 2012
and September 26, 2012. SAC at ¶ 14. The last two lease agreements were signed on September
26, 2012, after the Settlement Agreement was executed.
On September 6, 2012 Limited, A-1, FZC, Suresh, Kumar, and Vivek Gulatee (a cousin
of the brothers), signed a Settlement Agreement regarding the sale of Gulatee’s ownership
interest in Limited and FZC to Kumar and Suresh. The Settlement Agreement included the
following release of claims provision:
3.1 Each Party agrees (for itself and on behalf of each of its Affiliates and Agents)
that this Deed shall constitute full and final settlement, and irrevocable and
unconditional waiver and release, of all and any Claims of that Party and its
Affiliates and Agents against each other Party and each other Party’s Affiliates
The Agreement defines claims as:
[A]ll claims or causes of action of any kind whatsoever (whether present or future, actual,
prospective, or contingent, whether or not know[n] to any of the Parties at the date of this
Deed, and including for any fees, costs, or expenses) in any jurisdiction[s] that relate to,
arise from, or are otherwise connected to, or concern, the Prior Proposals, the Metal
Transfers, or any other matter connected with, concerning or related to: (i) Alliance
Limited, the SAIF-Zone Branch, Alliance FZC, or Alliance Limited’s, the SAIF-Zone
Branch’s, or Alliance FZC’s actual or proposed present, past or future, interests,
investments, transactions, operations or business . . . .
One of the Settlement Agreement Recitals states:
To enable the Buyback Documents and the Alliance FZC SPA [Share Purchase
Agreement] to be executed, the Parties wish to settle, waive and release all claims
that they may have as against each other that relate to, arise from, or are otherwise
connected to or concern, the Prior Proposals, the Metal Transfers [between
Limited and FZC], or any other matter connected with, concerning or related to (i)
Alliance Limited, Alliance FZC or Alliance Limited’s, or Alliance FZC’s actual
or proposed, present, past or future, interests, investments, transactions,
operations or business, or (ii) any other transaction, arrangement, undertaking,
understanding, agreement or contract (whether written or oral) between either
both of the Khoslas and/or A-1 (on the one hand) and Gulatee (on the other hand),
excluding the Alliance FZC SPA, or (iii) their respective shareholdings and
directorships) and related director’s duties) in Alliance Limited and Alliance FZC,
in each case, on the terms of this Deed.
The Settlement Agreement includes a choice of law clause stipulating its terms are to be
construed under English law, and the parties agreed to submit to the jurisdiction of English
courts. (Exhibit 17).
B. Action in England
On April 25, 2013, A-1 and Suresh filed an action in the High Court of Justice of
England against Limited, FCZ, Kumar and Vivek Gulatee to determine the scope of the
Settlement Agreement release provision. (Exhibit 20). The complaint in the English action
alleges that Suresh was to have acquired 60% interest in Limited, but the shares were never
issued. (Exhibit 21). The complaint further alleges that in an oral agreement related to the sale of
the shares, A-1 loaned Kumar $15 million to finance the acquisition of Gulatee’s shares. (Exhibit
A-1 and Suresh seek a determination in the English action that the Settlement Agreement
release provision does not bar Suresh’s claims to be issued the shares in Limited, and A-1’s
claims against Kumar regarding the outstanding $15 million loan. (Exhibit 20). Suresh and A-1
A-1 filed suit against Kumar in New Jersey Superior Court on March 20, 2013, demanding repayment of that $15
million loan. (Exhibit 21; ECF No. 34-1).
argue in the English action that “the Settlement Agreement was intended to compromise [only]
the disputes between the Brothers [Kumar and Suresh] on one hand and Vivek [Gulatee] on the
other hand.” (Exhibit 21).
Kumar and Limited filed a counterclaim on August 5, 2013 seeking a declaratory
judgment that the Settlement Agreement barred both Suresh’s claims to be issued the shares in
Limited and A-1’s claim for repayment of the $15 million loan. (Exhibit 22).
C. Similarities and Differences in the case before this Court and the English Case
In the English case, there are additional parties who are not parties here. All the parties in
this case are parties in the English action.
The Settlement Agreement appears to be more closely related to the dispute in England
than to the dispute in his case. The Settlement Agreement pertains to the transfer of shares that
are the subject of the dispute in the English action. In this action, A-1 contends that the release
provision of the Settlement Agreement bars Plaintiffs’ claims against it in this case. It appears
the release provision of the Settlement Agreement and the involvement of some of the parties are
the only areas of overlap between the two cases.
This case is a claim for monetary damages for breach of lease agreements. The English
case seeks a declaratory judgment that the Settlement Agreement does not bar Suresh’s claims to
be issued shares in Limited and A-1’s claims for the outstanding $15 million loan, and
defendants assert counterclaims that the Settlement does bar those claims.
II. PROCEDURAL HISTORY
On August 7, 2013, Defendant filed a motion to dismiss Plaintiff’s First Amended
Complaint, asserting as an affirmative defense, among other contentions, that the Settlement
Agreement’s release of claims provision bars Plaintiffs’ claims related to the lease agreements.
(ECF No. 16). This Court granted Plaintiff’s Motion for Leave to Amend its First Amended
Complaint, and denied Defendant’s motion to dismiss as moot on October 3, 2013. (ECF No.
Plaintiffs filed the Second Amended Complaint on October 8, 2013. (ECF No. 25). The
Second Amended Complaint added FZC as a co-plaintiff 4 and alleges breach of contract of the
lease agreements between Limited and A-1, (Count I), breach of contract of the lease agreements
between FZC and A-1, (Count II), breach of contract of the leases between Limited and A-1 of
metals owned by FZC as a third-party beneficiary (Count III), and unjust enrichment (Count
IV). (ECF No. 25).
At a pretrial conference on October 22, 2013 this Court ordered the parties to provide a
list of undisputed documents they agree should be considered part of the record in this case.
(ECF. No. 28). This Court further ordered Defendant to file any motions to dismiss for forum
nonconveniens separately from any motions to dismiss for failure to state claim. (ECF No. 28).
On November 26, 2013, Defendant filed a Motion to Dismiss or Stay the Second
Amended Complaint Pursuant to Principles of International Comity and the Doctrine of Forum
Non Conveniens. (ECF No. 32). Defendant contends this Court should stay or dismiss Plaintiffs’
Second Amended Complaint under 12(b)(7) for forum nonconveniens or principles of
international comity because the English action is pending and dispositive of the question
whether the Settlement Agreement bars Plaintiff’s claims. (EFC No. 32).
As mentioned supra, note 1, Limited alleges Kumar is the General Manager and Director of FZC, and is able to
join the company as a party to the lawsuit. (ECF No. 19). Although Defendant disputed this in its Opposition to
Plaintiff’s Motion for Leave to File a Second Amended Complaint (ECF No. 22), it has not argued this point in the
motion currently before this court.
The parties submitted a stipulation of facts—and twenty-two undisputed documents they
agree should be part of the record for the purposes of Defendant’s motion to stay or dismiss for
forum nonconveniens or international comity. (ECF No. 32-2). The documents comprise all of
the exhibits appended to the Second Amended Complaint (Exhibits 1-19), 5 and the complaint
and counter-claim filed in the High Court of Justice of England (Exhibits 20-22).
Defendant also appended an affidavit that was filed in the English litigation, regarding
service of process and proper forum for the English action. (ECF No. 32-5). Plaintiffs do not
agree that this document should be part of the record (ECF No. 32-2).
On January 31, 2014, the Court issued an Order requesting the parties to submit letter
briefs as to the choice of law issue. (ECF Nos. 37, 38).
THE PARTIES’ ARGUMENTS
A. International Comity
Defendant contends the meaning of the Settlement Agreement, including the release
clause, is currently before a High Court of Justice in England, and would dispose of nine of the
eleven lease disputes. 6
The documents include the eleven lease agreements (Exhibits 1-11); a letter from FZC to Limited regarding metals
balances (Exhibit 12); an excerpt from Limited’s financial statements noting FZC is “another company owned and
controlled by the [Limited] directors” (Exhibit 13); a Share Purchase Agreement for shares of FZC between Gulatee,
Kumar, and Suresh, and a Share Buyback Agreement for shares of Limited between Gulatee and Limited (Exhibit
14); a Memorandum of Understanding related to the purchase of shares in Limited and FZC (Exhibit 15); a letter
from FZC to Limited regarding payment of a percentage of leasing fees received from a third party (Exhibit 16); the
Settlement Agreement (Exhibit 17); an email from Suresh for Kumar asking Kumar to issue him shares in Limited,
to repay the $15 million loan, and to “write off Leases in Alliance Industries Limited and Alliance Industries FZC”
among other requests (Exhibit 18); and a letter from Limited to A-1 confirming the lease balance as of December
31, 2012 (Exhibit 19).
Defendant does not contend that the two lease agreements signed on September 26, 2012, after the Settlement
Agreement was executed on September 6, 2012, would be barred by the release provision.
1. Parallel Actions
Defendant contends the English action is a parallel action, because both courts are asked
to determine the scope of the release clause in the Settlement Agreement. Plaintiffs respond this
action is not based on any term of the Settlement Agreement, because the relief sought is based
solely on the eleven lease agreements in dispute. Plaintiffs further contend the course of dealing
demonstrates the release provision has no bearing on the mineral leases in question in this case.
B. Dismiss for Forum Non Conveniens
Defendant asserts Plaintiffs’ choice of forum deserves little deference because Plaintiffs
are foreign entities. Defendant asserts the private interest factors weigh in favor of dismissal,
because the other signatories to the Settlement Agreement and the lawyers who drafted it could
be witnesses and London is a more convenient forum for them. Plaintiffs respond that none of
these witnesses are relevant to this action, and dispute that the Settlement agreement has any
bearing on this case. Plaintiffs further note that all of the parties to the lease agreements and the
relative records are located in Pennsylvania and New Jersey.
Defendant argues the public interest factors favor dismissal because the English action is
duplicative, and it would conserve judicial resources to adjudicate the dispute in the less crowded
English courts. Defendant further contends the governing law is English law, and the dispute
does not have any ties to the Eastern District of Pennsylvania, so there is local interest in the
matter. Plaintiffs respond that Defendant breached the contracts in Pennsylvania and argue that
Pennsylvania has a keen interest in the operations of a company conducting its business in
1. Choice of Law
Plaintiffs assert Pennsylvania law governs. Plaintiffs contend there is no conflict
between Pennsylvania and English law, and if there was a conflict, the Pennsylvania choice of
law analysis would select Pennsylvania law to govern. Plaintiffs also argue the Defendant bears
the burden of proving foreign law under 44.1.
Defendant argues English law governs under the choice of law provision in the
Settlement Agreement, and contends a choice of law analysis is unnecessary to dismiss on the
basis of forum nonconveniens. Defendant proposes the parties brief each legal issue to
determine choice of law and proof of law, including expert affidavits on English law under 44.1.
Dismissal or stay for principles of international comity is discretionary. Somportex Ltd.
v. Philadelphia Chewing Gum Corp., 453 F.2d 435, 440 (3d Cir. 1971). Comity is an affirmative
defense, and the party seeking its application bears the burden of proof. Allstate Life Ins. Co. v.
Linter Group Ltd., 994 F.2d 996, 999 (2d Cir. 1993).
The Supreme Court and the Third Circuit have not ruled on any case with similar issues.
Other circuit courts have taken two distinct approaches. Gary B. Born & Peter B. Rutledge,
International Civil Litigation in United States Courts 523 (2007). Many courts, particularly
those in the Second, Seventh, and Eleventh Circuits, have applied the Colorado River analysis
for parallel proceedings in state and federal courts to the international context. Id. at 524; see,
e.g., Ingersoll Milling Machine Co. v. Granger, 833 F.2d 680, 685 (7th Cir. 1987); Laker
Airways, Ltd. v. Sabena Belgian World Airlines, 731 F.2d 909, 926-27 (D.C. Cir. 1984); Royal
& Sun Alliance Ins. Co. of Canada v. Century Int’l Arms, Inc., 466 F.3d 88, 92 (2d Cir. 2006).
The Supreme Court in Colorado River Water Conservation District v. United States emphasized
lower federal courts’ obligation to exercise jurisdiction granted by Congress, and found
jurisdiction can only be declined in “exceptional circumstances.” 424 U.S. 800, 818 (1976).
Some courts have instead applied the test used when parallel cases are pending in two
federal courts. See Itel Corp. v. M/S Victoria U, 710 F.2d 199 (5th Cir. 1983), Ensign-Bickford
Co. v. ICI Explosives USA, Inc., 817 F. Supp. 1018 (D. Conn. 1993). In Landis v. Northern
American Co., the Court held a “court’s ability to stay an action is incidental to its inherent
power” and did not require a showing of exceptional circumstances. 299 U.S. 248 (1936). The
Third Circuit has not weighed in on this issue, but under either approach the court must first find
the actions are in fact parallel. 7
The D.C. Circuit noted that “parallel proceedings on the same in personam claim should
ordinarily be allowed to proceed simultaneously, at least until a judgment is reached in one
which can be pled as res judicata in the other.” Laker Airways, Ltd. v. Sabena Belgian World
Airlines, 731 F.2d 909, 926-27 (D.C. Cir. 1984) (citing Colorado River, 424 U.S. at 817); see
also China Trade & Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33, 36 (2d Cir. 1987) (same);
Royal and Sun Alliance Ins. Co. of Canada v. Century Intern. Arms, Inc., 466 F.3d 88 (2d Cir.
1. The Actions Are Not Parallel
A proceeding is parallel when there is a “‘substantial likelihood that the [foreign]
litigation will dispose of all claims presented in the federal case.’” Lexington Ins. Co. v. Forrest,
263 F. Supp. 2d 986, 1002-03 n.13 (E.D. Pa. 2003) (quoting Lumen Constr. Inc. v. Brant Const.
In Clientron v. Devon, __ WL __, No. 13-5634 (slip op.) (March 10, 2014) the undersigned recently denied a stay
of proceedings in an action to enforce a foreign judgment based on an arbitration award in Taiwan where Taiwanese
law controlled. However, in that case there are questions as to the finality of the Taiwanese arbitration award.
Co., 780 F.2d 691, 695 (7th Cir. 1985)). The “key inquiry is whether the [foreign] litigation will
dispose of the claims before this Court.” Int’l Bus. Software, 440 F. Supp. 2d at 364-65.
In International Business Software Judge Sheridan found an Austrian proceeding was
parallel because the defendant “raised counterclaims virtually identical to its claims here.” 440
F. Supp. 2d at 364-65 (finding the Vienna court would retain jurisdiction over those
counterclaims, even if the original claim was dismissed). Since it was likely the Austrian
proceeding would address the same claims pending before the Eastern District of Pennsylvania,
Judge Sheridan found the Austrian proceeding was parallel. Id.
In Lexington Judge Brody found an English proceeding was not parallel, because “the
British court is not determining whether defendants’ alleged fraud injured plaintiff. Rather, the
question before the British court appears to be whether defendants’ fraud obviates plaintiff’s
obligation to indemnify Flashpoint’s creditors.” 263 F. Supp. 2d at 1003. Judge Brody also
noted it was possible the British court would never reach the question of the defendants’ fraud
defense. Id. Accordingly, there was not a “substantial likelihood” the English action would
dispose of all the claims presented. Id. at n.13.
The English action Defendant contends is parallel to this litigation will address whether
the Settlement Agreement release of claims provision bars Suresh’s claim to a 60% interest in
Limited and A-1’s claim for repayment of a $15 million loan to Kumar. Defendant raised the
same release provision of the Settlement Agreement as an affirmative defense in this action,
contending it the bars Plaintiffs’ claims regarding the lease agreements.
While the same release provision is relevant to determining both disputes, it is unclear
whether a ruling in the English action would advance the litigation in this case. Even if the
English court finds the release provision bars claims for the transfer of shares and the loan
repayment, that finding would not necessarily mean that the same provision would bar Plaintiff’s
breach of contract claims regarding the mineral lease agreements that are the subject of this
litigation. Moreover, it would not be necessarily inconsistent to find the claims in the English
action are barred, but the lease agreement claims are not.
As Judge Sheridan in International Business Software noted, the central question is
whether the foreign action could dispose of the claims at hand. Even if the English court
broadly interpreted the release clause, that ruling would not be dispositive in this case, because a
court must still determine whether a different kind of claim is barred by the same provision.
Finally, Defendant concedes the release would only bar nine of the eleven lease
agreements, because those nine leases were executed prior to the Settlement Agreement. At this
point in time, this Court cannot conclude that cases are parallel. Further, it is doubtful that a
judgment either in this court or in England would enjoy res judicata or collateral estoppel against
any party in the English case. 8 Since the English action is not substantially likely to dispose of
the claims before this Court, Defendant’s motion to dismiss or stay based on principals of
international comity shall be denied.
B. Forum Non Conveniens
Defendant contends the English action addresses whether the Settlement Agreement bars
Plaintiffs’ claims so this Court should dismiss or stay this action in favor of the English
A federal court has discretion to dismiss a case on the ground of forum non
conveniens “when an alternative forum has jurisdiction to hear [the] case, and ...
trial in the chosen forum would establish ... oppressiveness and vexation to a
defendant ... out of all proportion to plaintiff's convenience, or ... the chosen
forum [is] inappropriate because of considerations affecting the court’s own
administrative and legal problems.”
The Settlement Agreement is likely to be important in both cases, but the impact is likely to be different on specific
Sinochem Int’l Co. Ltd. v. Malaysia Int’l Shipping Corp., 549 U.S. 422, 429 (2007) (internal
citations omitted). Dismissal under forum non conveniens is within the district court’s
discretion. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 249 (1981). “[D]ismissal will ordinarily
be appropriate where trial in the plaintiff’s chosen forum imposes a heavy burden on the
defendant or the court, and where the plaintiff is unable to offer any specific reasons convenience
supporting his choice.” Id. The Third Circuit has required district courts to “supply specific
reasons and develop adequate facts to support its decision.” Lacey v. Cessna Aircraft Co., 862
F.2d 38, 43 (3d Cir. 1988) (holding a “district court abuses its discretion if it does not hold the
defendants to their proper burden on the forum non conveniens motion or has clearly erred in
weighing the factors to be considered”). “It is settled that the defendant bears the burden of
persuasion as to all elements of the forum non conveniens analysis.” Id. at 44.
First, the court must find an adequate alternative forum exists. Lacey, 862 F.2d at 43. In
Gulf Oil Corp. v. Gilbert the Supreme Court enumerated a list of private and public interest
factors to consider in determining whether to dismiss for forum nonconveniens. Private interest
factors include: “relative ease of access to sources of proof; availability of compulsory process
for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility
of view of premises, if view would be appropriate to the action; and . . . enforcibility [sic] of a
judgment if one is obtained.” Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947). Public
interest factors include administrative challenges and congesting courts, imposing jury duty on
those in a community with no relation to the action, interest in having local controversies decided
at home, and familiarity with the governing law. Id. at 508-09.
1. Deference to Plaintiff’s Choice of Forum
The Third Circuit gives less deference to a foreign plaintiff’s choice of forum than to the
choice of a domestic plaintiff. Lacey, 862 F.2d at 45-6. But, it also held this reduced deference
is “‘not an invitation to accord a foreign plaintiff’s selection of an American forum no deference
since dismissal for forum non conveniens is the exception rather than the rule.’” Id. (quoting In
re Air Crash Disaster Near New Orleans, La. on July 9, 1982, 821 F.2d 1147, 1164 n.26 (5th Cir.
1987)). “[T]he plaintiff’s choice of forum should rarely be disturbed, unless the balance of
factors is strongly in favor of the defendant. Id. at 43.
There is no dispute that England is an adequate alternative forum. The parties dispute
whether Plaintiffs’ choice of forum is entitled to any deference. 9 In Lacey the Third Circuit held
the district court “should have accorded at least some weight to the plaintiff’s choice” even
though the plaintiff was an Australian company, because the only fora available were British
Columbia and Pennsylvania, and both were foreign to the plaintiff and inconvenient. Lacey, 862
F.2d at 46. Here Plaintiffs are also faced with two foreign fora to bring their claims:
Pennsylvania and England. Since Defendant is a Pennsylvania resident, the claims here are at
least convenient to one of the parties. Following the Third Circuit, this Court should accord
some deference to Plaintiffs’ choice of forum.
2. Private Interest Factors
Plaintiffs contend all of the records and key witnesses relative to this dispute are located
in Bucks County, Pennsylvania, where Defendant operates, and Moorestown, New Jersey, where
the principals of Limited and FZC reside and store their corporate records. Pl. Br. at 16-17.
Plaintiffs contend they are not foreign, because the principals of the corporations, Kumar and Suresh, both live in
Moorestown, New Jersey. It is doubtful this factor is relevant to the deference analysis, because the Plaintiffs of
record are corporations with their principal place of business in the United Arab Emirates.
Defendant does not make any representations regarding the ease of access to proof, aside from
arguments that foreign witnesses may be called in this proceeding.
Defendant argues there are witnesses presently joined in the English action who would be
inconvenienced by traveling to this venue namely, Vivek Gulatee. 10 Although Defendant
contends an interpretation of the Settlement Agreement would affect his rights, Gulatee is not a
party to the lease agreements, so it is unclear how an interpretation related to those leases would
impact Gulatee’s rights. Defendant does not ask this Court to determine the scope of the release
provision for all potential claims. Rather, Defendant raises it as a defense to the breach of
contract claims in this action, which is a much more narrow issue. Finally, Defendant operates
within twenty miles of the federal courthouse, so it would not be a significant inconvenience to
the principals to litigate in this forum.
There is no question that a judgment would be enforceable in either forum. If the records
and relevant witnesses are all in fact located in Pennsylvania and New Jersey, it would appear
that the private interest factors favor litigating in this forum.
3. Public Interest Factors
The public interest factors are somewhat supportive of the foreign forum. Defendant
points to statistics suggesting English courts are less congested than the Eastern District of
Pennsylvania, which Plaintiffs dispute. 11 Regardless of the data’s veracity, this argument
presumes that the actions are in fact parallel. As discussed above, it is unlikely the English
action would dispose of all the claims in this case. The question whether the release provision
bars Plaintiffs’ breach of contract claims is not presently before the High Court of England, but
Travel between Philadelphia and London is neither difficult nor very expensive. Thus, the Court discounts the
argument by Defendants that the attorneys who represented the parties at the time they drafted the agreement would
be material witnesses, and this forum would be inconvenient for them to travel from London and Gibraltar.
This Court expects to start a trial before the end of this year, or, if necessary, within one year.
is before this Court. If this Court finds the Settlement Agreement bars Plaintiffs’ claims in this
case, but the English court reads the same provision to permit the stock transfer and loan claims,
that could be a technically inconsistent reading of the lease. But it is doubtful that such an
inconsistency would have any practical effect. A bar on some claims but not on others would not
require incompatible actions by the parties. Rather, some claims could proceed to litigation and
others could not.
Finally, Defendant concedes the British action would only address nine of the eleven
lease agreements, requiring continued litigation over the final two breach of contract claims.
Accordingly, these disputes will have to be litigated in some court.
The second question is whether the action has any ties to Pennsylvania. Defendants
contend it does not, because the leases and the Settlement Agreement are subject to English law,
and the minerals were to be delivered and returned in England. In United States v. Goldberg, the
Third Circuit found Pennsylvania had an interest in a wire fraud case because the funds
transferred from New York to Wilmington passed through the Federal Reserve Bank in
Philadelphia. 830 F.2d 459, 465 (3d Cir. 1987). Here, the alleged beach of contract occurred in
Pennsylvania where Defendant operates. Pennsylvania does have an interest in Defendant’s
transactions because Defendant operates in the commonwealth.
a. Governing Law
The final question is the ease of applying the relevant law. On January 31, 2014, the
Court issued an Order requesting the parties to submit letter briefs as to the choice of law issue.
(ECF Nos. 37, 38). Plaintiffs assert Pennsylvania law governs. Plaintiffs contend there is no
conflict between Pennsylvania and English law, and if there was a conflict, the Pennsylvania
choice of law analysis would select Pennsylvania law to govern. Defendant argues English law
governs. Defendant did not conduct a full choice of law analysis, but did note some instances
where English contract law differs from Pennsylvania contract law. Instead, Defendant relies on
the choice of law provision in the Settlement Agreement, and contends a choice of law analysis
is unnecessary to dismiss on the basis of forum nonconveniens. Defendant proposes the parties
brief each legal issue to determine choice of law and proof of law, including expert affidavits on
English law under 44.1.
Familiarity with the governing law is one of the public interest factors considered in
determining whether to dismiss. Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 509 (1947). (“There is
an appropriateness, too, in having the trial of a diversity case in a forum that is at home with the
state law that must govern the case, rather than having a court in some other forum untangle
problems in conflict of laws, and in law foreign to itself.”).
The Supreme Court has held the need to apply foreign law was not controlling. Piper
Aircraft Co. v. Reyno, 454 U.S. 235, 260 (1981). The Court found the district court in Piper
Aircraft accurately analyzed the foreign law factor. Id. The district found it was unfamiliar with
Scottish law and further found Scottish law applied to one of the plaintiffs’ claims but
Pennsylvania law applied to the other, so it would be confusing to present different legal
standards to the jury. Id. In a footnote, the Supreme Court elaborated:
Many forum non conveniens decisions have held that the need to apply foreign
law favors dismissal. See, e. g., Calavo Growers of California v. Belgium, 632
F.2d 963, 967 (CA2 1980), cert. denied, 449 U.S. 1084 (1981); Schertenleib v.
Traum, 589 F.2d, at 1165. Of course, this factor alone is not sufficient to warrant
dismissal when a balancing of all relevant factors shows that the plaintiff's chosen
forum is appropriate. See, e. g., Founding Church of Scientology v. Verlag, 536
F.2d 429, 436 (D.C. Cir. 1976); Burt v. Isthmus Development Co., 218 F.2d 353,
357 (5th Cir. 1955), cert. denied, 349 U.S. 922 (1955).
Id. at 260 n.29. Although the Third Circuit reversed the district court’s finding that Scottish law
applied, the Supreme Court held the district court’s analysis was an accurate application of
Gilbert. Id. Since all the other factors favored dismissal, the need to apply foreign law was not
controlling. Id. (finding this “factor alone is not sufficient to warrant dismissal when a
balancing of all relevant factors shows that the plaintiff's chosen forum is appropriate.”).
The Third Circuit routinely applies foreign law when forum non conveniens is denied.
See, e.g., Bhatnagar v. Surrendra Overseas Ltd., 52 F.3d 1220, 1228 (3d Cir. 1995) (applying
Indian law to a negligence action after upholding the district court’s denial of dismissal on forum
nonconveniens grounds because a ten to twelve year delay did not render the alternative forum
unavailable, but not discussing how the application of forum law weighed in favor of dismissal).
The Fifth Circuit noted that foreign law may be more difficult to apply if the relief sought is
“equitable or otherwise unusual relief peculiar to the foreign law,” but it is not particularly
complicated when the plaintiff simply seeks a money judgment. Burt v. Isthmus Dev. Co., 218
F.2d 353, 357 (5th Cir. 1955) (reversing the district court’s dismissal for forum non conveniens
because “[t]here are, no doubt, difficulties in attempting to determine and apply foreign law; but
the necessity to do so often occurs”).
The Federal Rules of Civil Procedure provide a mechanism to determine foreign law in
Rule 44.1 precisely because federal courts may and do apply the laws of other countries. This
alone is not the basis for dismissal under forum nonconveniens. Rather, dismissal is appropriate
when applying foreign law would be particularly onerous. In Piper Aircraft the district court
found it would confuse the jury to apply foreign law to one plaintiff but Pennsylvania law to the
other plaintiff’s claims. But, in Bhatnagar the district court found the action did “not present
substantial administrative difficulties” because even if the court had to apply Indian law “that
law is within the mainstream of common law.” Bhatnagar, 820 F. Supp. at 961-62 (“Moreover,
the possible need to apply foreign law is not a sufficient basis on its own to warrant dismissal
when other relevant factors favor the plaintiff's choice of forum.” (citing Piper, 454 U.S. at 260
n. 29)); see also Burt v. Isthmus Dev. Co., 218 F.2d at 357 (“The fact that success or failure
depends upon the law of Mexico does not, of itself, justify dismissal.”).
Accordingly, the question for forum nonconveniens is not whether foreign law applies,
but whether the application of foreign law would pose administrative difficulties.
While there might some variation in English and Pennsylvania law, the parties’ briefs on the
conflicts of law show the central principals of contract interpretation are consistent, if not
identical. This it to be expected, as our common law of contracts is based on English common
law. Moreover, no translation from a foreign language is required, and unlike in Piper Aircraft, a
jury would not be confused by applying different legal standards to the same issues. Since all of
the other factors favor Pennsylvania as the forum, the need to consider any variations between
English and Pennsylvania law is not such a strong administrative burden to outweigh those other
The Court initially determines that a dismissal in this case would be inappropriate, and
unfair to Plaintiffs, because of doubt that the English action is truly a parallel action. The
decision as to whether to stay this case is a closer one, but the Court concludes that it would not
be fair to Plaintiffs to issue a stay at this time, which would delay, for a possibly lengthy period,
any resolution of Plaintiffs’ claims, and the Court exercises its discretion to deny a stay.
One important reason for this conclusion is the Court concludes it is appropriate for the
parties to begin discovery in this case. It is well known that discovery in U.S. courts is much
broader than in England, and the Court believes that a robust and fair exchange of information
between the parties is likely to be of value in the litigation of the disputes, whether in this Court
or in England, or both. With discovery in this case, the parties will be able to obtain information
from each other, and third parties, in advance of trial, that they would not be able to obtain in
England. This process may also prompt constructive settlement discussions between the parties
in this very complex and financially large litigation.
Another factor dictating against a stay is the representation, by plaintiff’s counsel, that
the English litigation, although started slightly before this litigation, has not advanced beyond the
pleadings stage. This Court believes that discovery can be completed this calendar year, and the
case can be called for trial later this year or in early 2015.
An appropriate Order follows.
O:\CIVIL 13\13-2510 alliance industries v. A-1 specialized\13cv2510.mtd.denied.memo.3.10.14.docx
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