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Fourth Circuit holds Federal Government Immune from Contribution in Third-Party Death Action

On March 11, 2011, the New York Appellate Division (1st Dep't) held in Sojitz Corp. v. Prithvi Info. Solutions Ltd. that parties to an international arbitration may attach assets located in New York State as security for a future award in the arbitral proceedings even if the New York Court lacks personal jurisdiction over the parties.

This case arose out of a contract entered into between two foreign entities, whereby Sojitz Corp. would supply telecommunications equipment to Prithvi Info Solutions Ltd. (Prithvi). The contract included a clause requiring the parties to settle any dispute arising out of the contract through arbitration in Singapore. Sojitz Corp. delivered the equipment and an invoice for $47.5 million to Prithvi. Sojitz Corp. claimed they received payment totaling $5.6 million.

The New York Supreme Court initially granted Sojitz Corp.'s requested order of attachment in the amount of $40 million, and also allowed an attachment of $18,480, then owed to Prithvi by one of its few New York customers. Prithvi moved to vacate the attachment on the grounds that Prithvi did not maintain any offices in New York, was not licensed to do business in New York, and had no real assets or bank accounts in the state. The Supreme Court was persuaded by Prithvi's arguments to vacate the $40 million attachment. However, the Court confirmed the attachment of the $18,840 debt owed to Prithvi.

On appeal, the Appellate Division (1st Dep't) held that pursuant to Civil Practice Law and Rules (CPLR) 7502(c), a pre-award attachment in an international arbitration proceeding is proper because the petitioner is not seeking to compel a respondent to litigate the merits in an improper forum; the petitioner is merely seeking to have the property attached for future execution in the event a recovery is ordered by the out of state forum. Despite the fact that the New York Court did not have personal jurisdiction over Prithvi, the Appellate Division maintained the attachment as to the $18,480, stating that there was nothing fundamentally unfair about maintaining an attachment for security pending arbitration in a proper foreign forum. Additionally, the substantive and procedural safeguards available in CPRL 7502(c) do not violate due process. Specifically, the Court focused on the requirement that the petitioner show that any award issued by the arbitrator would otherwise be rendered ineffectual if the relief was not granted. To ensure that the attachment was not improperly upheld the Court ordered the arbitration proceedings to be commenced within thirty (30) days of the attachment.

Accordingly, there is now New York case law allowing parties to an international arbitration to attach assets located in New York State as security for a future award even if the New York Court lacks personal jurisdiction over the parties.

Read a copy of the New York Appellate Division (1st Dep't) Decision

For more information concerning this case and its application to any specific set of facts and circumstances, please do not hesitate to call on us at info@chaloslaw.com.

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