Southern District of New York Dismisses Petition to Confirm $145M Foreign Arbitration Award for Lack of Personal Jurisdiction

The Southern District of New York recently dismissed a petition to confirm a $145 million arbitration award rendered in Hong Kong based on lack of personal jurisdiction.

Zhongzhi Hi-Tech Overseas Investment Ltd. obtained a $145 million arbitration award in Hong Kong against Dr. Vincent Wenyong Shi related to Dr. Shi’s and another company’s alleged failure to make contractually required payments.

Hi-Tech moved to confirm that award in the Southern District of New York. Dr. Shi moved to dismiss, claiming a lack of personal jurisdiction. The court granted the motion, holding that New York’s long-arm statute was not met and that jurisdiction did not comport with due process.

Hi-Tech argued that New York’s long-arm statute was met based on Dr. Shi’s (1) execution of a contract providing that New York law would govern that contract, (2) Dr. Shi’s defense of a lawsuit pending in the Southern District, and (3) Dr. Shi’s role as an executive of a company listed on the New York Stock Exchange. The district court rejected these arguments.

First, it noted that the contract had been amended and that its choice-of-law provision had been replaced by a new clause providing that Hong Kong law would govern. The original choice-of-law provision therefore provided no basis for jurisdiction, and Hi-Tech conceded that a choice-of-law provision “does not equate to consent to jurisdiction” in any event.

Second, Dr. Shi was involved in defending a suit in the Southern District against a company he was involved in, but “a party’s consent to jurisdiction in one case extends to that case alone” and therefore did not provide a basis for jurisdiction against Dr. Shi in this case.

Third, although a company Dr. Shi was a leader in had been listed on the New York Stock Exchange, having a company listed on the NYSE is not sufficient to confer jurisdiction. Even if it was, the company had been delisted and there was thus no basis for jurisdiction.

With respect to due process, the court noted that New York and the United States had little interest in the dispute and that Dr. Shi had little or no reason to expect to be hailed into court there.

Zhongzhi Hi-Tech Overseas Investment Ltd. v. Wenyong Shi, No. 1:22-cv-06977 (S.D.N.Y. July 17, 2023).