Source: http://ny.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20010425_0000093.SNY.htm/qx
Timestamp: 2017-05-01 00:38:18
Document Index: 220107839

Matched Legal Cases: ['§ 1330', '§ 1332', '§ 1330', '§ 1330', '§ 1603', '§ 1603', '§ 1603']

| LEHMAN BROTHERS COMMERCIAL CORPORATION v. MINMETALS INT'L
LEHMAN BROTHERS COMMERCIAL CORPORATION v. MINMETALS INT'L
LEHMAN BROTHERS COMMERCIAL CORPORATION AND LEHMAN BROTHERS SPECIAL FINANCE INC., PLAINTIFFS,v.MINMETALS INTERNATIONAL NON-FERROUS METALS TRADING COMPANY AND CHINA NATIONAL METALS AND MINERALS IMPORT AND EXPORT COMPANY, DEFENDANTS. MINMETALS INTERNATIONAL NON-FERROUS, METALS TRADING COMPANY, COUNTERCLAIM PLAINTIFF, V. LEHMAN BROTHERS INC., LEHMAN BROTHERS ASIA LIMITED, LEHMAN BROTHERS SECURITIES ASIA LIMITED AND LEHMAN BROTHERS CAPITAL CO., (H.K.) LIMITED, ADDITIONAL COUNTERCLAIM DEFENDANTS.
Before the Court is a motion by the Plaintiffs Lehmah Brothers
Commercial Corporation and Lehman Brothers Special Financing, Inc.*fn1
to strike the jury demand in this case pursuant to 28 U.S.C. § 1330
(a) ("section 1330(a)"). The Defendants Minmetals International
Non-Ferrous Metals Trading Company ("Non-Ferrous") and China National
Metals & Minerals Import & Export Corporation ("Minmetals") oppose the
motion. For the reasons that follow in this Opinion and Order, the Court
grants Lehman's motion. Any trial in this case will be before this Court
without a jury.
The Court will discuss only those circumstances that are relevant to
the current motion, as the background to this case is fully set forth in
a previous decision of this Court. See Lehman Bros. Commercial Corp. v.
Minmetals Int'l Non-Ferrous Metals Trading Co., No. 94 Civ. 8301, 2000 WL
1702039 (S.D.N Y Nov. 13, 2000). Lehman, a global investment bank, is a
citizen of the United States. Id. at *1. Minmetals is the parent
corporation of the Minmetals Group, an international trading conglomerate
that is owned entirely by the People's Republic of China ("China") and
reports directly to China's Ministry of Foreign Trade and Economic
Cooperation. Id. Non-Ferrous is a wholly-owned subsidiary of Minmetals.
Lehman originally asserted that this Court's jurisdiction in this case
was based upon diversity of citizenship, pursuant to 28 U.S.C. § 1332
(a)(2), and alternatively, upon section 1330(a), known as the Foreign
Sovereign Immunities Act, codified at 28 U.S.C. § 1330, 1441(d),
1602 et seq. ("FSIA"). Along with its answer to Lehman's complaint,
Non-Ferrous asserted fourteen counterclaims against Lehman, two of which
were subsequently dismissed by an Opinion and Order of this Court. See
Lehman Bros. Commercial Corp., 2000 WL 1702039 at *10.
Both Lehman and the Defendants entered jury demands in this case. In a
letter to this Court dated November 30, 2000, however, Lehman stated that
this Court's exclusive source of jurisdiction in this case was section
1330(a), which, according to Lehman, mandates a nonjury
trial. The parties subsequently briefed and filed the motion that is now
The FSIA provides that "[t]he district courts shall have original
jurisdiction . . . of any nonjury civil action against a foreign state as
defined in section 1603(a) of this title as to any claim for relief. .
. ." 28 U.S.C. § 1330 (a). Section 1603(a) of that title states that
the term "foreign state" "includes a political subdivision of a foreign
state or an agency or instrumentality of a foreign state. . . ." See
28 U.S.C. § 1603 (a) ("section 1603(a)").
Lehman argues that because this case is a civil action against two
foreign — state defendants, section 1330(a) requires that any
trial in this case be nonjury. The Defendants, on the other hand, argue
that this case may be tried before a jury, at least in part, for three
reasons: (1) Non-Ferrous is not a foreign-state defendant as defined in
section 1603(a); (2) foreign-state defendants can waive the protection
of the nonjury provision in section 1330(a); and (3) section 1330(a)
does not govern Non-Ferrous' counterclaims against Lehman.*fn2 The Court
will address the Defendants' contentions in that order.
A. FSIA's Applicability to Non-Ferrous
Minmetals concedes that it is governed by the FSIA because it is the
instrumentality of a foreign state, China. (See Defs.' Opp. Mem. at 10,
15). Non-Ferrous, on the other hand, asserts that it does not fall under
the FSIA because it is neither a political subdivision of a foreign state
(China) nor an agency or instrumentality of China. Lehman does not argue
that Non-Ferrous is a political subdivision of China, and so this Court
need only determine whether Non-Ferrous is an agency or instrumentality
The term "agency or instrumentality of a foreign state" is defined in
28 U.S.C. § 1603 (b) ("section 1603(b)") as "a separate legal
person, corporate or otherwise, and . . . [inter alia,] a majority of
whose shares or other ownership interest is owned by a foreign state or
political subdivision thereof . . ." 28 U.S.C. § 1603 (b)(1)-(2)
Non-Ferrous argues that it is not an "agency or instrumentality of a
foreign state" as defined in section 1603(b) because it is not
majority-owned by a foreign state or a political subdivision of a foreign
state. Non-Ferrous acknowledges that its sole owner, Minmetals, is an
instrumentality of a foreign state. It argues, however, that because
Minmetals is neither a foreign state nor a political subdivision of a
foreign state, Non-Ferrous cannot be an "agency or instrumentality of a
foreign state" as defined in section 1603(b). As a result, it would not
be a "foreign state" as defined in section 1603(a), and would not fall
under the FSIA.
Non-Ferrous' argument depends upon the breadth of the term "foreign
state" as it is used in section 1603(b). If that term is used in section
1603(b) to refer only to foreign states themselves, Non-Ferrous is not
an agency or instrumentality under that subsection.*fn3 On the
other hand, if the term "foreign state" in section 1603(b) itself
includes an agency or instrumentality of a foreign state as defined in