ATTACHMENT IN AID OF ARBITRATION ALLOWED IN LOUISIANA WHEN UNDERLYING CLAIM IS FOR MONEY DAMAGES
Stemcor USA Inc. v. CIA Siderurgica Do Para Cosipar, 2018-1728 (La. 05/08/19), 2019 La. LEXIS 1350, 2019 WL 2041826.
By:Shelia Tolar
Two creditors attached the samepig iron owned by the common debtor, American Metals Trading L.L.P. (AMT). ASouth Korean company, Daewoo International Corp. (Daewoo), entered into aseries of contracts for the purchase of pig iron. Daewoo made payments, but AMTnever delivered the pig iron. Daewoo sued AMT and sought to compel AMT toarbitrate the dispute according to the contracts and for a writ of attachmentof AMT’s pig iron. The United States District Court for the Eastern District ofLouisiana granted the writ of attachment, and it was properly delivered onDecember 22, 2012. Thyssenkrupp Mannex GMBH (TKM) also entered into contractswith AMT for the purchase of pig iron, which AMT failed to deliver. TKM filedsuit in the 24th Judicial District Court for Jefferson Parish, Louisiana andsought a writ of attachment over the same pig iron. The state court granted thewrit, which was served a week after federal attachment
TKM moved to vacate Daewoo’sattachment, arguing that La. C.C.P. art 3542, the non-resident attachment statute, does not allowattachment in aid of arbitration. The question was whether the suit to compelarbitration is an action for a money judgment. The federal district court agreedwith TKM and vacated Daewoo’s writ. As noted by the Louisiana Supreme Court[1], the trial judge was underthe mistaken belief that (1) Louisiana’s arbitration statutes do not permitpre-arbitration attachments and (2) Louisiana had not adopted the UnitedNations Commission on International Trade Law (UNCITRAL) Model Law, whichexpressly authorizes pre-arbitration attachments. However, the LouisianaRevised Statute provides “[i]t is not incompatible with an arbitrationagreement for a party to request, before or during arbitral proceedings, from acourt an interim measure of protection and for a court to grant themeasure."[2]
The Fifth Circuit Court of Appealvacated the district court’s order in favor of TKM but withdrew its opinion on rehearing.The Fifth Circuit then said that Daewoo’s writ of attachment was valid on othergrounds. When both parties filed for rehearing, the Fifth Circuit decided tocertify the question to the Louisiana Supreme Court to determine “the precisemeaning of the phrase ‘action for a money judgment’ under Louisiana'snon-resident attachment statute.”
TKM argued that Daewoo’s suit tocompel arbitration is not “an action for a money judgment” because the suitdoes not seek an order to compel payment of an amount of money. Daewoocountered that La. C.C.P. 3542 allowed attachment “in aid of” securing a futurearbitration award of a money judgment. The parties disagreed, the districtcourts were split, and the federal appeals court was uncertain about the meaning.The Louisiana Supreme Court accepted the certified question of law and determinedthat the phrase “in any action for money judgment” is not clear andunambiguous. Thus, the court looked to “the purpose of the statute, the contextof the language within the statute, and the context of the law as a whole” tointerpret the statute.[3] While Daewoo filed suit tocompel arbitration, the Supreme Court reasoned that Daewoo ultimately seeks torecover money damages. This is the same goal of TKM’s suit against AMT.Daewoo’s contract with AMT included an arbitration clause while TKM’s contractwith AMT did not. While the methods used by the creditors differed because ofthe respective contracts, the goals were the same – payment of money damages. Therefore,it was found that “in any action for money judgment” encompasses a creditor’ssuit to compel arbitration where the “ultimate goal is to obtain a moneyjudgment against the debtor” and the moving party has satisfied therequirements to obtain a writ of attachment.
[1] 2019 La. LEXIS 1350 at *7-8.
[2] LSA-R.S. 9:4249.
[3] See Red StickStudio, 56 So. 3d 181, 187-88 (La. 2011).
