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United States: District Court For the Northern District Of California Opinion in Carolina Power & Light Company v. Uranex (Jurisdiction; Prejudgment Attachment of Foreign Defendant; Convention on the Recognition and Enforcement of Foreign Arbitral Awards)

Published online by Cambridge University Press:  20 March 2017

Abstract

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Type
Judicial and Similar Proceedings
Copyright
Copyright © American Society of International Law 1978

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References

* [No appeal was taken and the case was closed by stipulation on June 12, 1978. [The U.S. Supreme Court decision in Shaffer v.. Heitner , concerning the constitutionall imitations on quasi i remjuris diction , appears at 16 I.L.M. 885 (1977) .]

1/ If the courts of some other'jurisdiction were able to ob- — tain in personam jurisdiction over both Uranex and Homestake, then it would be appropriate for this court to dismiss the instant action and leave CP&L to its remedies in that jurisdiction. There appears to be little question that a federal district court with in personam jurisdiction over both the alleged debtor and the stakeholder could issue orders for security purposes that would have extraterritorial effect. United States v. First Nat'l City Bank, 379 U.S. 378 (1965); Fleming v. Gray Mfg. Co., 352 F. Supp. 724 (D. Conn. 1973) . Neither party, however, has suggested that there is any state where in personam jurisdiction could be obtained over both Homestake and Uranex. If the courts of another- jurisdiction could obtain in personam jurisdiction only over Uranex, it is possible that an order running against Uranex would also bind Homestake in the sense that Hpmestake could be an “aider and abettor” in’ the violation of the injunction if after notice of the injunction it simply transferred the funds to France. Southern Cent. Dell Tel. Co. v. Constant Inc., 304 F. Supp. 732 (E.D.-Xa. 1969), aff'd 437 F.2d 1207 (5th Cir. 1971); Fed. R. Civ. p. 65. Such courts, however, would be unable to undertake civil contempt proceedings as to Homestake without personal jurisdiction, and after removal of the assets contempt procedures against Urane'x would be an empty formality. The court is unwilling to send CP&L on this more hazardous procedural route.

2/ Uranex also argues that a prejudgment attachment is inconsistent with the agreement of the parties. Article 11 of the contract between Uranex and CP-tL, however, provides only that: “Arbitration Any controversy or claim arising out of this Agreement, or the breach thereof, which the parties are unable to settle by mutual consultation, shall be settled by arbitration by three impartial Arbitrators, all of whom shall be attorneys, in accordance with the Rules of the American Arbitration Association, and judgment upon the award rendered by the Arbitrators may.vbe entered in any court having jurisdiction thereof. The arbitration shall take place in New York, New York.” Hence, prejudgment attachment can be considered inconsistent with the agreement only if one decides that such attachment is inherently inconsistent with any agreement to arbitrate. In that sense defendant's argument premised on the contract is actually identical with defendant's argument premised on the Convention. Insofar as defendant's contractual argument might be considered separately, the court finds it to be without basis.

3/ In Mccreary the Third Circuit commented that the approach taken in Murray Oil Products Co. v. Mitsui & Co., supra, was rejected “in a diversity context” by the Supreme Court in Bernhardt v. Polygraphic Co. of America, Inc., 350 U.S. 198 (1956) . This comment is inaccurate. Murray Oil Products concerned a contract in interstate commerce with an arbitration clause and the United States Arbitration Act clearly applied. On defendant's motion the district court had stayed the action pending arbitration, and after the arbitrators had found for the plaintiff, the district court entered summary judgment for plaintiff pursuant to the arbitral decision. V7riting for the Second Circuit, Judge Learned Hand held that it was appropriate for the district court to enter summary judgment on the arbitral award without requiring plaintiff to initiate a separate action for confirmation of the arbitral award. With respect to this decision he observed that “ [arbitration is merely a form of trial, to be adopted in the action itself, in place of the trial at common law … .” 14 6 F.2d at 38 3. He then v/ent on to determine, as a second and separate issue, that the Unitgd States Arbitration Act allowed the district court to maintain a prejudgment attachment pending arbitration. In Bernhardt v. Polygraphic Co. of America, Inc., supra, the Supreme Court first determined that the contract in question did not involve intcrestate commerce, and hence that the rules of the United States Arbitration Act could not be applied directly as substantive law. The court also decided that rules concerning the validity of arbitration agreements were substantive and not procedural, and that therefore in a diversity case not involving interstate commerce state .rules of law on arbitration were to be applied. It was in that context that the Supreme Court quoted and “rejected” Learned Hand's comment that arbitration was “merely a form of trial;” .None of the questions actually .decided in Murray Oil Products were involved in Bernhardt v. Polygraphic Co. of America, Inc., supra.

4/ There are over 50 contracting nations to the Convention, and “equally authentic” texts in five different languages. See Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Art. XVI.

5/ Neither party has suggested that in its dealings with CP&L Uranex was acting as an agent for COGEMA, and it will be assumed that in contracting with CP&L Uranex acted for its own account or for the account of some other principle. Obviovtsly if COGEMA were the principle in both contracts, different problems would be presented.

6/ Plaintiff CP&L has suggested an al ternative theory for maintaining the attachment. Uranex i s a groupoment d’ interest“’ economiquc, a type of business organization rather like a” joint venture or partnership. COGEMA i s a member of Uranex, and members of a .groupemont are jointly and severally liable for liabilities arising from its activities . CP&L argues that under that theory of liability the attachment may be maintained regardless of whether the attached funds are actually the property of-COGEMA. Under California law, however, a partner may not be held personally liable unless he is served and brought into the action. Promotus Enterprises Inc. v. Jiininoz, 21 Cal. App. 3d 560,90 Cal.. Rptr. 571 (1971). CP&L has never made COGEMA a party to this action.

7/ This determination makes it unnecessary to resolve the contentions surrounding the application of the Foreign Sovereign Immunity Act of 1976, P.L. 94-583, 90 Stat. 2891, et sog. indicated above automatically is stayed for 10 days from the judgment.

8/ It is, of course, clear that.an order vacating an attachment is a final order from which an appeal may be taken. Swift & Co. Packers v. Compania Colombiana Del Caribe, S.A., 339 U.S. 684 (1950)