The case of the day is AlbaniaBEG Ambient Sh.p.k. v. Enel S.p.A. (N.Y. App. Div. 2018). I wrote about a related procedural decision in March 2016.
AlbaniaBEG was the Albanian subsidiary of Becchetti Energy Group S.p.A., an Italian firm. The defendants, Enel S.p.A. and Enelpower S.p.A., are also Italian companies; Enel is Italy’s largest power company. Becchetti made a contract with Enelpower for the possible construction of a hydroelectric plant in Albania. The agreement had an Italian choice-of-law clause, and it required arbitration of disputes in Rome. Enelpower withdrew from the project, and BEG demanded arbitration. The tribunal’s award dismissed BEG’s claims against Enelpower. BEG sought to nullify the award in the Italian courts, but the courts rejected its claim.
While all this was going on, AlbaniaBEG, the subsidiary, which held Becchetti’s concession from the Albanian government, sued Enel and Enelpower in the Tirana District Court for unfair competition. AlbaniaBEG argued its claims were not barred by the agreement to arbitrate or the award because it was not a party to the agreement and was not asserting contractual claims. The court awarded damages to AlbaniaBEG, and the judgment was affirmed on appeal.
AlbaniaBEG then sought recognition and enforcement of the Albanian judgment in New York and sought an ex parte restraining order. Enel and Enelpower sought to dismiss for lack of personal jurisdiction, noting that AlbainaBEG itself had acknowledged that they were foreign corporations wwith “no known presence in the state of New York” and that there was no allegation that they had property there or that the dispute had anything to do with New York. The judge denied the motion to dismiss, citing Abu Dhabi Commercial Bank v. Saad Trading, 986 N.Y.S.2d 454 (App. Div. 2014), for the proposition that a judgment creditor can proceed in New York even without showing personal jurisdiction. Enel appealed, relying on Daimler, i.e., relying on federal due process requirements rather than on New York law.
On appeal, the court rejected the argument that Daimler and its restriction on general personal jurisdiction to states where a corporation is “at home” should apply in the context of recognition and enforcement when the judgment debtor has raised one of the substantive defenses to recongition available under New York’s recognition statute. Instead, it adopts a view that I have written about approvingly a few times (most recently )here: under Shaffer v. Heitner, 433 U.S. 186 (1977), it’s enough that the judgment debtor have property in the forum state. In other words, the doctrine of quasi in rem jurisdiction lives. The practical policy of this rule is clear: a judgment debtor would otherwise have an easy way to shield assets from execution.
It’s not entirely clear why the court was so careful to limit its conclusion to cases where the defendant raises a substantive defense to recognition. After all, as the court recognizes, under New York law (and, I think, under any law), it is a “basic principle that a court must have jurisdiction in rem or in personam in order to enter a valid judgment of any kind.” A consideration of this point would lead to consideration of the policy issues Greg Shill has raised in his work on judgment arbitrage, which I will not discuss here in any detail. But to the extent there are differences between the states in the law of recognition of foreign judgments, the rule of full faith and credit makes the possibility of recognition in a state that lacks any jurisdictional nexus with the judgment debtor problematic.