Background
Sociedad Concesionaria Metropolitana de Salud S.A. obtained an arbitral award in Chile against Astaldi S.p.A. for breach of a hospital construction contract. Astaldi later restructured, merging its operating business into Webuild S.p.A. while leaving Astaldi to liquidate. Sociedad Concesionaria sought to enforce the award in Delaware against Webuild, alleging Webuild was Astaldi’s successor in interest. The company attempted to invoke quasi in rem jurisdiction over Webuild’s shares in a Delaware subsidiary. The District Court dismissed the petition, ruling that Shaffer v. Heitner required minimum contacts between the forum and the defendant for all quasi in rem actions.
The court’s reasoning
The Court of Appeals agreed with the appellant that Shaffer v. Heitner footnote thirty-six creates an exception to the minimum contacts requirement for actions to collect on an already adjudicated liability. The Court reasoned that once a court of competent jurisdiction has determined a defendant is a debtor, there is no unfairness in allowing an action to realize on that debt in a state where the defendant has property. This logic extends to foreign arbitral awards enforced under the New York Convention, as the enforcement proceeding is a summary action that converts the award into a judgment. The Court distinguished Rush v. Savchuk and Nehemiah v. Athletics Cong. of U.S., noting those cases involved plenary actions to adjudicate liability rather than post-judgment collection proceedings.
Once it has been determined by a court of competent jurisdiction that the defendant is a debtor of the plaintiff, there would seem to be no unfairness in allowing an action to realize on that debt in a State where the defendant has property, whether or not that State would have jurisdiction to determine the existence of the debt as an original matter.
Shaffer v. Heitner, 433 U.S. 186, 210 n.36 (1977)
What it means going forward
Creditors seeking to enforce foreign arbitral awards in the Third Circuit may now attach a debtor’s property in the forum state to collect on the award without proving minimum contacts, provided the underlying arbitration was conducted by a court or tribunal of competent jurisdiction.