Originally from:
The Practice of International Litigation - 2nd Edition - Looseleaf
The Practice of International Litigation - 2nd Edition - Electronic
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Forum Non Conveniens: Determining the Adequacy of an Alternative Forum
Lawrence W. Newman and Michael Burrows
American courts sometimes find themselves in the uncomfortable
position of having to pass judgment on the adequacy or fairness of courts
of other countries. Sometimes, as discussed in a previous chapter, this
happens in the context of an action to enforce a judgment entered in
another country. The need to judge another nation’s courts may also arise
when a party seeks dismissal of an action in the United States on forum non
conveniens grounds, in favor of an alternative forum abroad.
When a court faced with a motion to dismiss on the basis of
forum non conveniens addresses the threshold issue of the adequacy of the
proposed foreign forum it must draw conclusions as to the quality of
administration of justice in that forum. In doing so, the court must
determine what information – and what sources of information – should be
looked to in making that decision. Recent decisions shed light on the type
of evidence – in terms of form and substance – that courts have found
persuasive in determining the adequacy of a foreign forum in forum non
conveniens motions.
HSBC Case
In HSBC USA, Inc. v. Prosegur Paraguay, S.A., 2004 WL 2210283
(S.D.N.Y. September 30, 2004), Judge Preska denied a motion to dismiss
on forum non conveniens grounds in favor of the courts of Paraguay made
by defendant Prosegur, a Paraguayan armored car company. Prosegur had
an agreement with HSBC to transport currency from Paraguayan banks to
the airport in Asunción. On one occasion, armed men robbed a shipment
of $11,132,000 as it was being loaded onto a plane. HSBC sued Prosegur on
various theories in connection with the loss of the funds.
Judge Preska denied Prosegur’s forum non conveniens motion for
a variety of reasons, the most emphasized of which was the inability of
HSBC to receive a fair hearing in the matter in Paraguay – that is, whether
the Paraguayan courts were an adequate alternative to the New York court,
assuming they were convenient.
HSBC defended by presenting a declaration by a professor of
international law that provided various kinds of negative information
regarding the judicial system in Paraguay. Much of the information came
from comments on the Paraguayan courts made in Country Reports on
Human Rights Practices, which the U.S. Department of State is required to
submit annually to Congress regarding human rights conditions in countries
around the world. The 1999 Country Report for Paraguay, issued in
February 2000, “noted,” according to the district court, “that denials of fair
trials are common in Paraguay and the courts are often pressured by
politicians and other persons whose interests are at stake.”
The law professor supplemented these reports with a statement
(apparently attributable to Transparency International, which publishes an
annual index based on businessmen’s perceptions of corruption in various
countries around the world) that “Paraguay was ranked the fourth most
corrupt country in the world (behind Bangladesh, Nigeria and Haiti).” Also,
the professor quoted in his declaration a remark by the former Attorney
General of Paraguay that “there is a ‘mafia’ that controls the judiciary.”
Lawrence W. Newman has been a partner in the New York office of Baker & McKenzie since 1971, when, together with the late Professor Henry deVries, he founded the litigation department in that office. He is the author/editor of 4 works on international litigation/arbitration.
Michael Burrows, Formerly, Of Counsel, Baker & McKenzie, New York.
