Case of the Day: Nanko Shipping v. Alcoa
Posted on June 19, 2015
The case of the day is Nanko Shipping USA v. Alcoa, Inc. (D.D.C. 2015). The Republic of Guinea is a major source of bauxite, the world’s main source of aluminum. In the past 50 years, the Compagnie des Bauxites de Guinee, owned by Guinea and by Halco Mining, Inc., has produced more than 600 tons of bauxite for export. The bauxite has been used to produce 150 million tons of aluminum, worth more than $400 billion. Guinea, which had the right to ship half of the bauxite CBG mined under a contract with Halco, had a contract with Nanko Shipping Guinea, under which Nanko would exercise Guinea’s right to ship the bauxite. Nanko and its parent company, Nanko Shipping USA, as well as its principal, Mori Diane, sued Halco and Alcoa, which it claimed was an alter ego of Halco (and, with Rio Tinto, majority owner of Halco), alleging that Nanko was a third-party beneficiary of the contract and that Halco and Alcoa had refused to allow Nanko to ship the bauxite. Alcoa moved to dismiss for failure to join an indispensable party, namely Guinea.
By way of background to the procedure, under FRCP 19(a)(1), persons who are “subject to service of process and whose joinder will not deprive the court of subject-matter jurisdiction” must be joined as parties if, in the person’s absence, the court cannot “accord complete relief among existing parties,” or if the person “claims an interest relating to the subject of the action” and failure to join the person could impair the person’s ability to protect its interest, or create a risk that a party would become subject to inconsistent obligations. If a person who is required to be joined if feasible —a “necessary party”—cannot be joined, then under FRCP 19(b) the court has to consider “whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed.” A party whose absence from the case leads to dismissal is called an “indispensable party.” Under FRCP 12(b)(7), failure to join an indispensable party is grounds for dismissal before the defendants answer the complaint.
Guinea was a necessary party, because a decision in the case required a construction of the contract, which could affect Guinea’s rights. Here, Nanko failed to join Guinea because it understood that Guinea was immune from suit under the FSIA. So the question is whether Guinea was also an indispensable party. The court held that it was, noting that Guinea could be prejudiced if the litigation proceeded, and noting that Nanko had an adequate alternative remedy, namely arbitration under this contract. This, of course, is an odd way to put things: since the contract had an agreement to arbitrate, the lawsuit was liable to dismissal anyway, a point the court noted in a footnote. But in any event, because Guinea was a necessary and indispensable party, the case had to be dismissed.