Opinion ID: 1476448
Heading Depth: 1
Heading Rank: 4

Heading: Summary of the Court Of Chancery Opinion

Text: In an opinion handed down on October 22, 2003, the Court of Chancery granted Pan American's motion to dismiss on the grounds of lack of subject matter jurisdiction and, alternatively, forum non conveniens. As for subject matter jurisdiction, the Court held that none of Candlewood's claims was equitable in character and that although on its face the complaint purported to seek an equitable remedyspecific performance of Pan American's contractual obligation to purchase a policy insuring against damage to FSB's landin reality, Candlewood and FSB's claim was one at law for money damages. Because the harm to the land had already occurred, the remedy would have to take the form of a monetary award, whether or not Pan American had purchased an insurance policy. Therefore, because the complaint did not allege that the remedy at law was inadequate and specific performance was not necessary for the relief sought by Candlewood, the Court dismissed the complaint for lack of subject matter jurisdiction. To summarize meaningfully the Court of Chancery's forum non conveniens rulings, it is helpful to discuss first the legal standard for dismissal under the forum non conveniens doctrine. Under Delaware law the moving party must demonstrate, with particularity, that being required to litigate in Delaware would subject it to overwhelming hardship. As this Court stated in Warburg, Pincus Ventures, L.P. v. Schrapper : Our jurisprudence is clear that a complaint will not be dismissed on the ground of forum non conveniens without a showing of overwhelming hardship. While this standard is not preclusive, it requires a defendant to show that the case is one of the rare cases where the drastic relief of dismissal is warranted based on a strong showing that the burden of litigating in this forum is so severe as to result in manifest hardship to the defendant. [7] In assessing whether or not overwhelming hardship has been shown, Delaware courts employ an analysis predicated upon the six so-called Cryo-Maid factors, [8] which are: (1) the relative ease of access to proof; (2) the availability of compulsory process for witnesses; (3) the possibility of a view of the premises; (4) whether the controversy is dependent upon the application of Delaware law which the courts of this State more properly should decide than those of another jurisdiction; (5) the pendency or nonpendency of a similar action or actions in another jurisdiction; and (6) all other practical problems that would make trial of the case easy, expeditious, and inexpensive. [9] In its opinion, the Court of Chancery identified these legal standards accurately. The Court also appropriately framed the issue, as being not whether Pan American has shown that Argentina is a better forum for the litigation, but whether Pan American has shown with particularity, through one or more of the Cryo-Maid factors, that litigating in Delaware constitutes an overwhelming hardship. [10] Having analyzed each of the Cryo-Maid factors, the Court of Chancery ruled that all of them favored Pan American, reasoning as follows: Access To Proof: The Court found that (1) all the witnesses, physical evidence and documents relating to Pan American's defense are located in a remote area of Argentina, from which traveling to Delaware to litigate would be extremely inconvenient; (2) the five employees most knowledgeable of Pan American's activities in Argentina live in Argentina, speak minimal English, and are so critical to normal business operations that if those employees are required to travel to Delaware for trial, Pan American's business will suffer significant disruption; (3) the relevant documents are virtually all in Spanish and are in active use in Argentina; and (4) securing live testimony of the witnesses and producing English translations of the relevant documents in Delaware will entail substantial burdens to Pan American, and as a practical matter may cause Pan American to suffer the deprivation of live testimony and, resultantly. . . have difficulty presenting rebuttal testimony. [11] Compulsory Process for Witnesses: The Court of Chancery found that it may have limited powers to compel access to witnesses and documents, because although Argentina is a signatory to the Hague Convention To The Taking Of Evidence Abroad In Civil And Commercial Matters, the Argentine Republic will not execute Letters of Request for the purpose of obtaining pre-trial discovery of documents. Because of that reservation to the Hague Convention, the Court of Chancery stated that Pan American may have no pre-trial discovery. [12] View of The Premises: The Court of Chancery found that the need to view the premises . . . is greater than in cases that do not involve injury to real property. Although video is a substitute, it is only thata substitute, for which reason (the Court concluded) Pan American will clearly suffer difficulties if forced to litigate in Delaware because the finder of fact cannot view the premises. [13] Delaware's Interest in the Litigation: The Court found Delaware's interest in a dispute over injury to land in Argentina is minimal, but that: Argentina, as owner of all oil and gas resources in Argentina, has a bona fide interest in any compensation paid to FSB due to damage allegedly caused by Pan American's operations pursuant to extraction rights granted to it by Argentina. This interest is not speculative and is evidenced by the Nation of Argentina and Province of Salta's submissions before the Supreme Court of Argentina. A decision in this action will likely implicate Argentina's right to regulate access to surface property that lies above government owned oil and gas fields. Furthermore, a decision will implicate Argentina's economic interests because a decision adverse to Pan American may reduce the revenues Argentina derives from Pan American's extraction activities. [Given] the significant interests of Argentine governmental entities, the Argentine courts may have exclusive jurisdiction over this dispute . . . [that] . . . may independently deprive this Court of its jurisdiction. Regardless, Argentina's significant interest in this litigation and Delaware's limited interest in this litigation, counsels judicial discretion strongly in favor of dismissal. [14] Other Pending Litigation: The Court found that an action similar to this litigation was pending before the Argentine courts, which are as fully capable as the Delaware courts of resolving disputes of this nature. Actually, the Argentine courts may be more capable (the Court of Chancery opined), since they can exercise jurisdiction over the Nation of Argentina and the Province of Salta. Other Practical Problems: Lastly, the Court of Chancery identified a practical problem. FSB had previously executed and delivered to Pan American, Receipts for Indemnification in exchange for compensation that Pan American had paid to FSB for damage caused by its seismic surveying activity on FSB's property. The Receipts for Indemnification contained an exclusive Argentine forum selection clause. That created a practical problem, the Court of Chancery found, namely that because only the Argentine courts had jurisdiction over damage claims resulting from seismic activities, it will be necessary to delineate clearly the line between the damage caused by the seismic activities and the damage caused by oil and gas extraction. . . .a complicated task that could prove unmanageable. Argentine courts would not face this same definitional problem and could hear all issues surrounding Pan American's activities. [15] Taking these factors into consideration, the Court of Chancery concluded they showed, in the aggregate, that: [L]itigating this dispute in Delaware would constitute an overwhelming hardship to Pan American. Delaware has little or no interest in resolving this dispute. Plaintiffs purchased real estate in Argentina. They formed an Argentine entity to develop the resources located in Argentina. They negotiated and executed contracts in Argentina. The breach of these contracts, and the alleged tortious conduct attendant thereto, all occurred in Argentina. Argentine law will govern this dispute. Finally, Argentine governmental authorities have expressed a direct interest in this controversy. Litigating this matter in Delaware, rather than in Argentina, defies common sense. [16]