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Juridica Investments Limited v. S&T Oil Equipment and MacHinery Limited

United States District Court, N.D. Illinois, Eastern Division

December 30, 2014



JAMES B. ZAGEL, District Judge.

This matter is presently before the court on Plaintiff Juridica Investments Limited's ("Juridica" or "Plaintiff") motion to remand the instant action to state court and for payment of fees and expenses incurred as a result of the improper removal of this action.


At the core of this dispute is a security agreement (the "Investment Agreement") executed by Plaintiff and S&T Oil Equipment and Machinery ("S&T" or together with Valerian Simirica, "Defendants") under the Uniform Commercial Code. When the Investment Agreement was executed in 2008, Defendants were litigating two actions against the nation of Romania - a lawsuit in the Romanian court system and an arbitration before the International Centre for Settlement of Investment Disputes. The Investment Agreement grants a first-priority security interest to Plaintiff in Defendants' entitlements to the "Proceeds" of both actions (as defined in the Investment Agreement) and a first-priority security interest in S&T's shares in exchange for Plaintiff's payment of an amount to be used to cover certain of Defendants' litigation fees and expenses. As it is referred to in the Investment Agreement, "Collateral" includes the Proceeds from the actions. It is alleged that Defendants received an $800, 000 judgment from their litigation with Romania.

The Investment Agreement contains a number of dispute resolution provisions. The Investment Agreement has an arbitration provision, Section 15.1, as well as a provision that expressly exempts certain actions from this arbitration provision, Section 16.0. Section 16.0 provides:

Without limiting the other provisions of Section 15 of this Agreement which provide exclusively that all disputes between the Parties will be arbitrated, [Juridica] shall have the right to take action under the applicable provisions of the Uniform Commercial Code in effect from time to time in the courts of the state of where Collateral is located from time to time to enforce its rights in and to and to foreclose upon the Collateral. In any action under this Section, the Parties agree that any court in which such relief is sought shall determine the availability of such relief without regard to any defenses that may be asserted by the other party. The Parties agree that any such defenses shall be referred to the exclusive jurisdiction of the arbitrators under Section 15 and that the court shall not defer or delay granting a remedy while any such arbitration takes place.

Section 15.1 references this exemption, stating:

Except with respect to enforcement actions by [Juridica] to foreclose on Collateral under the Uniform Commercial Code, arbitration as described in this Section shall be the exclusive means and the exclusive forum for the Parties to settle any and all disputes between or among them....

In December 2010, Plaintiff and Defendants arbitrated a number of claims arising out of the Investment Agreement in accordance with the arbitration provisions of the Investment Agreement. One of the claims was a dispute as to whether Defendants were required to put the $800, 000 judgment that they received from their litigation with Romania in an escrow account. The parties submitted their dispute before the London Court of International Arbitration ("LCIA"). In 2011, S&T sought an injunction from the United States District Court for the Southern District of Texas seeking relief from the arbitration provision in the Investment Agreement. In 2012, the Fifth Circuit affirmed the district court's dismissal of S&T's request for relief from the arbitration provision, finding that the Convention controls the arbitration provision in the Agreement. See S&T Oil Equip. & Mach., Ltd. v. Juridica Investments Ltd., 456 F.Appx. 481 (5th Cir. 2012), affirming S&T Oil Equip. & Mach., Ltd. v. Juridica Investments Limited, 2011WL 1565996 (S.D. Tex. April 25, 2011).

In 2013, the LCIA panel reached a unanimous decision and decided that it would not require Defendants to pay funds into an escrow account to safeguard Juridica's entitlement to the Proceeds. As a part of this decision, the LCIA panel awarded legal fees of $396, 333 to Defendants, which they have since collected.


On August 6, 2014, Plaintiff filed its Complaint for Breach of Contract, Foreclosure, and Detinue (the "Complaint") against Defendants in Dupage County Court. Plaintiff seeks foreclosure of the Proceeds described in the Investment Agreement. On November 13, 2014, Defendants removed the action by filing the original notice of removal (the "Original Notice"). Defendants' Original Notice based jurisdiction on the diversity statute, 28 U.S.C. § 1332. On November 19, 2014, Plaintiff filed this motion to remand the instant action to state court. The next day, on November 20, 2014, Defendants filed an amended notice of removal that based removal on federal question jurisdiction, 28 U.S.C. § 1331, via 9 U.S.C.A. § 205 (the "Amended Notice"), and conceded that "clearly diversity does not exist."


I. ...

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