La Dolce Vita Fine Dining Company Limited v. Lan

Background

La Dolce Vita Fine Dining Company Limited and La Dolce Vita Fine Dining Group Holdings Limited asked the court to confirm two foreign arbitration awards issued by the China International Economic and Trade Arbitration Commission. The awards arose from claims that Zhang Lan, Grand Lan Holdings Group (BVJ) Limited, and Qiao Jiang Lan Development Limited misrepresented the financial condition of South Beauty Investment Company Limited, in which the petitioners owned a majority stake. The combined principal amount of the awards was $142,463,666.28.

The awards were affirmed by the Second China International Commercial Court. The petitioners did not seek a judgment confirming the awards in their entirety. Instead, they sought a judgment against Zhang limited to the proceeds from selling a New York apartment, after transaction costs and other liens, plus proceeds from selling the apartment’s remaining contents.

Before this case, the petitioners had obtained an order attaching the apartment in a separate proceeding. Metro Joy International LLC held title to the apartment. Zhang received notice of the petitioners’ request to confirm the attachment but did not appear or oppose it. The attachment order stated that the respondents had received proper notice but had not appeared through counsel or filed opposition.

Quasi in Rem Jurisdiction

Zhang argued that the court lacked quasi in rem personal jurisdiction, meaning authority based on a defendant’s interest in property located in the court’s area, because she did not hold title to or purchase the apartment. The petitioners agreed that Metro Joy held title but argued that Zhang controlled Metro Joy, paid for the apartment, and had effective ownership of it.

The court held that it could exercise this type of jurisdiction without requiring the usual minimum-contacts showing because an arbitration panel that had personal jurisdiction over Zhang had already determined that she and the other arbitral respondents owed the petitioners money. The remaining question was whether Zhang had an interest in the apartment.

The court found sufficient evidence of such an interest. The evidence included the timing and amount of money transfers connected with the apartment’s purchase, communications referring to Zhang as the owner, insurance documents identifying Zhang and her son as contacts, and an email asking that the owner’s name of the apartment be changed so it would not be used with “Zhang Lan.” Zhang offered no evidence rebutting this material. The court therefore found that her interest in the apartment was sufficient to support quasi in rem jurisdiction.

Venue

Zhang argued that venue was improper because the underlying dispute had no connection to New York and the parties to that dispute were not subject to personal jurisdiction there. The court disagreed with the view that venue under Section 204 of the New York Convention automatically exists wherever subject-matter jurisdiction exists. It nevertheless held that venue was proper because a proceeding to attach the New York apartment as security for enforcement of a judgment could have been brought in that district. Such an attachment proceeding qualified as an action or proceeding related to the parties’ controversy.

Forum Non Conveniens

Zhang also asked the court to dismiss under forum non conveniens, a doctrine allowing a court to decline a case when a foreign forum is substantially more appropriate. The court held that Zhang had not shown dismissal was warranted.

The petitioners had legitimate reasons for choosing New York: they believed Zhang and the other respondents might hide assets and had already sought attachment of property located there. The court also found that Zhang had not identified specific evidence that would make the confirmation proceeding burdensome in New York. Finally, the United States’ policy favoring confirmation of international arbitration awards weighed against dismissal.

Challenge Under the New York Convention

Zhang argued that the court should refuse confirmation under Article V of the New York Convention because the arbitration authority was not composed as required by the parties’ agreement. Specifically, she claimed that the arbitration commission failed to appoint all three arbitrators required by the 2012 rules of the China International Economic and Trade Arbitration Commission.

Zhang had raised the same argument before the arbitration panel and the Second China International Commercial Court, which rejected it. The district court held that, regardless of how much deference was owed to those decisions, Zhang had not met her burden of proving that the tribunal’s composition violated the parties’ agreement. The record supported the finding that the three-arbitrator requirement did not apply when one side did not exercise its right to nominate an arbitrator, and that Zhang and the corporate respondents had declined to make a joint nomination despite Zhang’s authorization to act for them.

Disposition

Judge Lewis A. Kaplan overruled Zhang’s objections and granted the petition to confirm the arbitration awards. The court directed the petitioners to submit a judgment by February 24, 2023, on two business days’ notice.