Summary of the Facts
Argentina awarded a concession for its water and sewer utility to a private company named Aguas. Years later Aguas sought to terminate its concession, which was rejected by Argentina. Shortly thereafter, Argentina terminated Aguas’ concession. Argentina created state-owned defendant AySA to assign the concession.
As a result of the loss of the concession, Aguas was forced to file for protection from its creditors. Those creditors, plaintiff ALRG, seek to hold AySA as successor in interest to Aguas liable for Aguas’ debts. ALRG brought suit against AySA in federal district court in New York. A copy of the complaint can be found here.
In opposition to defendant AySA’s motion to dismiss for improper venue, ALRG argued that AySA is bound to a New York forum because (i) Aguas was a signatory to financing and loan agreements containing waivers to forum non conveniens for a New York venue, and (ii) New York was a convenient forum for the parties.
Decision
The primary issue addressed by Judge Carter in his decision was whether New York is a proper venue for this lawsuit.
Judge Carter noted that neither plaintiff nor defendant are parties to the financing and loan agreements containing the New York forum waivers. He further noted that, “[t]he Second Circuit has suggested that district courts need not afford great deference to waivers of forum non conveniens upon non-signatories, even where the non-signatory is an alleged successor to the waiver.”
In this case, both parties are non-signatories to the forum waivers, which the Court found made an even stronger case for the forum waivers’ inapplicability. The Court held that plaintiff could not hold the defendant liable for the forum waivers, where defendant was not a party to the relevant agreements and did not even exist when the agreements were created. As such, the Court rejected plaintiff’s argument that the parties have contracted to use New York as their chosen forum. Consequently, the Court was required to engage in a traditional forum non conveniens analysis.
Courts in the Second Circuit engage in a three-step analysis when determining whether a lawsuit should be dismissed on the basis on forum non conveniens. First, the Court must assess whether there is an adequate alternative forum for the lawsuit. The Court found that Argentina was an adequate alternative forum for this lawsuit. Second, the Court must determine the degree of deference to afford to the plaintiff’s choice of forum. The Court’s analysis resulted in a finding that little deference was afforded to plaintiff’s choice of forum. Third, the Court must weigh the private and public interests to determine which forum would best serve the interests of convenience and justice. The Court found that the private interests involved overwhelmingly favored Argentina as the most appropriate forum, and that the public interests indicated that dismissal on the basis of forum non conveniens was appropriate.
