Equipav S.A. Pavimentacao, Engenharia e Comercio Ltda. v. Bertin

Background

Equipav, the successor to Empate Engenharia e Comércio Ltda., sought confirmation under the New York Convention and the Federal Arbitration Act of a June 3, 2019 Brazilian arbitration award against Silmar Roberto Bertin and nonparty Heber Participagées SA. The dispute arose from a 2010 agreement that divided the assets of Grupo CIBE after Empate and Heber ended their partnership. Under that agreement, Heber was required to release and replace guarantees made using Grupo CIBE’s assets, and Bertin personally guaranteed Heber’s debts. The arbitrators found that Heber failed to replace the guarantees and that Bertin was liable for Heber’s obligations.

Equipav also sought confirmation of an order of attachment concerning Bertin’s assets in the district. Morgan Stanley identified an account associated with Bertin, and Bertin stated that he did not oppose confirmation of the attachment as to funds held by Morgan Stanley. Bertin moved to dismiss for lack of personal jurisdiction or, alternatively, for a stay while Brazilian proceedings concerning the award continued.

Personal Jurisdiction

The court held that Equipav had not shown specific personal jurisdiction under New York’s long-arm statute. Even assuming that Bertin’s alleged purposeful use of a New York correspondent bank account could qualify as transacting business in New York, Equipav did not plead facts connecting that account to the restructuring agreement, the division of corporate assets, or the claims decided in the Brazilian arbitration. The court also rejected jurisdiction under Federal Rule of Civil Procedure 4(k)(2), because Equipav had not shown a sufficient connection between Bertin’s United States financial activity and the underlying dispute.

The court denied Equipav’s request for jurisdictional discovery, reasoning that its allegations did not suggest a basis for specific jurisdiction and that an investigation by Black Cube lasting at least a year had not uncovered facts establishing the required connection.

The court nevertheless held that it had jurisdiction over Bertin’s property in the district under a property-based jurisdiction theory. Because the arbitration panel had already adjudicated Equipav’s claims against Bertin and determined that he owed Equipav money, the court concluded that the property-based jurisdiction theory did not require proof of minimum contacts. On that basis, the court denied Bertin’s motion to dismiss to the extent it challenged jurisdiction over the attached property.

Motion for a Stay

The court denied Bertin’s motion to stay the confirmation proceeding. Applying factors governing whether to pause enforcement while a foreign court considers setting aside an award, the court emphasized that the award had been issued more than four years earlier, Bertin had not challenged it in Brazil until after Equipav sought confirmation in this district, the Brazilian trial court had rejected Bertin’s challenge, and the Brazilian appellate court had declined to stay the trial court’s decision. Although Equipav had also brought a Brazilian proceeding to enforce the award, the court found that the factors overall favored denying a stay.

Confirmation of the Attachment

The court held that Equipav satisfied the requirements for confirming the attachment order: it had a valid claim, was likely to succeed on the merits, had a statutory basis for attachment because Bertin resided outside New York, and showed that the amount demanded exceeded known counterclaims. The court also found that attachment was needed to secure payment and to support jurisdiction over property in the district. It therefore confirmed the July 14, 2022 attachment order, limiting it to the assets supporting jurisdiction.

Confirmation of the Arbitration Award

The court explained that review of a foreign arbitration award under the New York Convention is narrow. A court generally must confirm the award unless a Convention ground for refusing or postponing enforcement is established. After reviewing the award and the restructuring agreement, the court found that the arbitrators acted within their authority and that there was no evidence of corruption, fraud, or other improper conduct requiring refusal of confirmation.

Because the court’s jurisdiction rested on the attached property, it limited confirmation of the award and the resulting judgment to the value of Bertin’s assets located in the district. The conclusion states that amount as $12,620.65, representing funds held by Morgan Stanley. The petition to confirm the arbitration award was granted as stated, Bertin’s motion to dismiss or for a stay was denied, the attachment order was confirmed in the stated amount, judgment was entered for Equipav, and the case was closed.

Ruling

The order both resolved the merits of Equipav’s request to confirm the arbitration award and addressed Bertin’s jurisdictional and stay objections. The resulting classification is mixed under the stated convention because the court reached the merits of the award while also deciding jurisdictional issues.