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Court Finds Diamond Dispute Should Proceed in Belgium, Not the U.S.

A need for Dutch to English legal translation services and for Flemish to English legal document translations often comes up in cases involving international litigation and forum selection clauses. In Lazare Kaplan International v. KBC Bank, et al., the plaintiff, a diamond company, claimed that the defendants conspired to steal diamonds and diamond proceeds that belonged to the plaintiff. At issue was whether the case should continue in the United States, where the plaintiff was a U.S. Citizen, or in Belgium, where the defendants and documents were located.

Background.

The plaintiff is in the diamond business. While headquartered in New York, the plaintiff conducted business in Belgium through a subsidiary. The plaintiff bought and sold rough and polished diamonds and financed its operation through lines of credit with various financial institutions like the defendants.

Plaintiff’s Allegations.

In plaintiff’s complaint, the plaintiff claimed that the defendants engaged in racketeering and other corrupt practices. Plaintiff further claimed that the defendants also engaged in a systemic money laundering scheme in conjunction with a certain banking customer and with various other associates. Specifically, the plaintiff claimed that the defendants were involved in stealing the plaintiff’s diamonds, transferring them in a matter that was difficult to trace, laundering them through various legitimate and illegitimate businesses in their network, and then using the proceeds from the diamonds to pay for certain disastrous loans that the defendant had made to the plaintiff.

The plaintiff claimed that in 2009, it informed the defendant banks that it had not received payment from the sale of diamonds to a certain entity. The plaintiff claims that it asked the banks for assistance in recouping the funds, but the banks refused to help and actually obstructed its attempt to investigate. Instead, the plaintiff alleged that the defendant banks threatened plaintiff and canceled its line of credit. This effectively terminated the plaintiff’s business.

Defendant Initiates Legal Proceedings in Belgium.

In 2010 the defendant field a lawsuit against the plaintiff in Antwerp, Belgium seeking to recover the $45 million in loans it extended to the plaintiff. The plaintiff filed counter-claims in this litigation and also filed a criminal complaint against the defendant and the entity that failed to pay for the diamonds it purchased.

Plaintiff Files Federal Court Lawsuit

The following year the plaintiff filed its lawsuit in the United States District Court for the Southern District of New York. The defendant filed a motion to transfer the case to Belgium on the grounds of forum non conveniens, but the Second Circuit Court of Appeals vacated and remanded the case back to the district court to determine the applicability of each forum selection clauses set forth in the contracts the parties signed. The plaintiff then filed an amended complaint, which the defendants again moved to dismiss. A discussion of the court’s ruling follows below.

Court Grants Defendant’s Motion to Dismiss

In deciding the defendant’s motion to dismiss, the court explained it needed to determine whether the plaintiff’s claims were governed by the forum selection clause. The plaintiff argued that the claims should be litigated in New York, while the defendant believed they should be litigated in Belgium. The court held that the parties’ forum selection clause required the claims to be litigated in Belgium. The court reasoned that the language in the agreement was clear and unambiguous in selecting Belgium as the location for resolving disputes. The court found that the location was set forth in the agreement in bold and was set forth in a separate paragraph heading. The court further reasoned that the agreement specifically stated that “the courts of Antwerp, Belgium shall have exclusive jurisdiction…” Accordingly, the court held Belgium was reasonably communicated to the plaintiff as the chosen forum for resolving litigation and that the forum selection was mandatory.

Having decided that the forum selection clause was fairly communicated to the plaintiff, the court next evaluated whether the plaintiff’s claims were actually subject to the forum selection clause in the first place. The plaintiff argued that the Antwerp forum selection clause did not apply because its claims did not relate to or depend upon the parties’ contract. The court held, however, that the forum selection clause specifically stated that it applied to “any action brought against the Bank.” The court also found that the forum selection clause applied because the plaintiff did not have any kind of relationship with the defendants outside of their contractual agreements.

The court further held that even if it had held that the plaintiff’s claims were beyond the scope of the forum selection clause, that it would still hold that the case should be tried in Belgium pursuant to the forum non conveniens doctrine. The court considered a number of factors in making this determination.

First, the court held that “the substantive issues and conduct [had] a greater relation to Belgium. This is because while plaintiff is a U.S. citizen, the defendants were Belgium corporations and none of the non-party entities are U.S. Citizens. Second, the court found that the matter should proceed in Belgium because the parties were already litigating similar issues there. Third, the court held that the availability of Flemish-speaking witnesses requiring English legal interpreters did not weigh in favor of having the case heard in the United States. The court reasoned that the evidence and witnesses were located outside of the United States since all of the participants and witnesses were either Belgium or from other foreign countries. The court further reasoned that because many of the key witnesses spoke Flemish and a substantial amount of the documents were written in Dutch, that numerous Dutch legal documents would have to be translated into English, a burdensome endeavor which would serve to increase the defendants’ litigation costs.

Based on the foregoing, the court granted the defendant’s motion to dismiss the case for forum non conveniens.

The case is Lazare Kaplan International v. KBC Bank and Antwerp Diamond Bank, Court No. 11-cv-09490, decided on August 29, 2018 by the United States District Court for the Southern District of New York.

Get in touch with All Language Alliance, Inc. to discuss your need for legal translation services from Flemish and Dutch to English, and from English to Dutch and to Flemish. Reach out to us to retain Dutch deposition interpreters for remote depositions for international litigation and to hire a Dutch deposition interpreter for an on-site depo interpretation.

 

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