The Battle of the Pig Iron
Stemcor USA Inc. v. CIA Siderurgica do Para Cosipar, 927 F.3d 906 (5th Cir. 2019).
By: Dominic Ciaccio
The Fifth Circuit considered whether Louisiana’s non-resident attachment statute allows for attachment in aid of arbitration. The simple answer is yes. Although, the procedural history to get to this answer was far more complicated. This matter came on a second rehearing after certification to the Louisiana Supreme Court “the question of whether a suit seeking to compel arbitration is an ‘action for a money judgment’” [1] under the non-resident attachment statute.[2]
This issue came before the court because of a dispute between two creditors, Daewoo International Corporation (“Daewoo”) and Thyssenkrupp Mannex GMBH (“TKM”). Both entered into contractual agreements with American Metals Trading L.L.P. (“AMT”) for the purchase of pig iron. AMT failed to make deliveries to both Daewoo and TKM. Consequently, Daewoo sued AMT in the Eastern District of Louisiana and sought an order to compel arbitration and attach the pig iron under both maritime attachment and the Louisiana non-resident attachment statute.In addition, Daewoo sought a money judgment.
Later, TKM attached the same pig iron in Louisiana state court and intervened in Daewoo’s federal suit, arguing that Daewoo had no legal right for attachment.The district court agreed with TKM and vacated Daewoo’s judgment because the “underlying suit sought to compel arbitration, it was not an ‘action for a money judgment’”[3] under the Louisiana statute. Daewoo appealed the court’s decision to the Fifth Circuit, which at first affirmed the district court but reconsidered the matter upon rehearing.
In the second rehearing, the court established federal subject matter jurisdiction under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”). Two requirements must be met to satisfy jurisdiction under the Convention: “(1) there must be an arbitration agreement or award that falls under the Convention, and (2) the dispute must relate to that arbitration agreement.”[4] Daewoo’s arbitration agreement with AMT satisfied both requirements. The appeals court then certified the issue to the Louisiana Supreme Court.
The Louisiana Supreme Court stated that Louisiana’s non-resident attachment statute “allows for arbitration if the origin of the underlying arbitration claim is one pursuing money damages and the arbitral party has satisfied the statutory requirements necessary to obtain a writ of attachment.”[5] As a result of this determination, the appeals court concluded an action seeking to compel arbitration is an “action for a money judgment.”[6] Although the origin of the claim is arbitration, Daewoo had made it clear it would be pursuing a money judgment.As such, the Fifth Circuit vacated the district court’s finding that the Louisiana non-resident attachment statute was not available to Daewoo.
[1] Stemcor USA Inc. v. CIA Siderurgica do Para Cosipar, 927 F.3d 906, 908 (5th Cir. 2019).
[2] La. Code Civ. P. art. 3542.
[3] Stemcor USA Inc. v. CIA Siderurgica do Para Cosipar, 927 F.3d at 908.
[4] Id. at 909.
[5] Id. at 911.
[6] Id.
