The opinion of the court was delivered by: McLaughlin, J.
This case concerns an arbitration award that was awarded in favor of the petitioner, Aurum Asset Managers, LLC ("Aurum") and against the respondent Banco Do Estado Do Rio Grande Do Sul's ("Banrisul"). The Court confirmed the arbitration award on June 24, 2008. The respondent moves to vacate the confirmation and argues that the Court was without subject matter jurisdiction to confirm the award because Banrisul is entitled to sovereign immunity. For the reasons stated below, the Court will grant the respondent's motion and vacate the confirmation.
On June 9, 2008, the petitioner, a company organized under the laws of the Commonwealth of Pennsylvania with its principal place of business in Exton, Pennsylvania, filed a petition seeking to enforce an arbitration award entered in its favor and against Banrisul, a state-owned financial institution organized under the laws of the Federal Republic of Brazil with its principal place of business in the Brazilian State of Rio Grande do Sul. On June 24, 2008, the Honorable Gene E.K. Pratter confirmed the arbitration award without appearance from Banrisul (Docket No. 2). On June 23, 2009, Banrisul filed a Motion to Vacate Default Judgment and to Stay Enforcement Thereof (Docket No. 3). Following supplemental briefing and a telephone conference with counsel, on July 16, 2009, the Honorable Thomas M. Golden entered an order staying enforcement of the award pending review of the motion to vacate (Docket No. 12). On the same day, the petitioner filed a Motion to Amend Judgment (Docket No. 13). The case was reassigned to the undersigned on August 30, 2010 (Docket No. 23).
This matter concerns contractual relationships among several companies: Aurum, the petitioner and assignee of reinsurance assets of Evergreen National Indemnity Company ("Evergreen"), formerly doing business as Summit Fidelity and Surety Company ("Summit Fidelity"), Bradesco Companhia de Seguros ("Bradesco"), a reinsurance company, Companhia União de Seguros Gerais ("União"), a reinsurance company, and Banrisul, a financial institution. Aurum's Petition to Confirm Arbitration Award and Enter Judgment ("Pet.") ¶¶ 1-5. Aurum is a Pennsylvania corporation; Evergreen, formerly doing business as Summit Fidelity, is an Ohio company; and Bradesco, União, and Banrisul are all domiciled in Brazil.
From 1976 to 1981, União was a member of a reinsurance pool of Brazilian insurance companies: Grupo de Empresas Seguradoras Brasileiras ("GESB") [Brazilian Insurance Companies Group]. Aurum's Response to Motion to Vacate Default Judgment and Stay Enforcement ("Pet'r's Opp'n") at 3. During this period, Summit Fidelity entered into an agreement with the GESB: the Quota Share Retrocession Agreement ("Treaty"). Pet. ¶ 8; Pet'r's Opp'n at 3. This Treaty contained an arbitration agreement. Pet. ¶ 16. Through the GESB, União received payments from Summit Fidelity. Pet. ¶ 10. As a result, União was to remit payments to Summit Fidelity from União's participation in the GESB. Pet. ¶ 11. The GESB stopped remitting payments to Summit Fidelity in 1982. Pet. ¶ 12; Pet'r's Opp'n at 3. Banrisul was not a signatory or party to the Treaty.
Prior to November 1997, Banrisul owned a majority of União's stock. Pet'r's Opp'n at 3; Banrisul's Memorandum of Law in Support of . . . Motion to Vacate Default Judgment ("Resp't's Br.") at 2. On or about November 25, 1997, Banrisul sold all of its shares in União to Bradesco at public auction. Pet'r's Opp'n at 3; Resp't's Br. at 5. As part of the sale, Banrisul remained responsible to Bradesco for União's responsibilities stemming from the GESB. See Agreement of Commitment for the Assumption of Obligations and Other Covenants, Ex. B to Ex. 1 to Docket No. 11, ("Commitment") Art. 4; Contract for the Purchase and Sale of Shares, Ex. B to Ex. 1 to Docket No. 11, ("Sales Agreement")
Art. 3. Banrisul and Bradesco further agreed that Brazilian courts and law would govern any disputes between the parties to the sale. Sales Agreement Art. 9; Commitment Art. 6.
In June 2006, Aurum acquired the right to reinsurance receivables from Evergreen, successor-in-interest to Summit Fidelity. Pet. ¶ 15. In an effort to recover the balances owed to Aurum through its acquisition, Aurum submitted a demand for arbitration on January 12, 2007. Pet. ¶ 17. Banrisul did not take part in the arbitration process. Pet. ¶¶ 19-20.
The Court will consider the respondent's Motion to Vacate Default Judgment as a request for relief under Fed. R. Civ. P. 60(b)(4).*fn1 Rule 60(b)(4) allows a court to relieve a party from a final judgment if the judgment is void. A judgment is void "only if the court that rendered it lacked jurisdiction of the subject matter, or of the parties, or if it acted in a manner inconsistent with due process of law." Union Switch & Signal Div. Am. Standard Inc. v. United Elec., Radio & Mach. Workers, 900 F.2d 608, 612 n.1 (3d Cir. 1990) (quoting 11 Wright and Miller, Federal Practice and Procedure § 2862 198-99). A Rule 60(b) motion is considered "extraordinary relief which should be granted only where extraordinary justifying circumstances are present," Plisco v. Union R.R. Co., 379 F.2d 15, 16 (3d Cir. 1967), because courts recognize an "overriding interest in the finality and repose of judgments . . . ." Mayberry v. Maroney, 558 F.2d 1159, 1164 (3d Cir. 1977). Here, Banrisul contends that the judgment in question is void because the Court lacked subject matter jurisdiction to enter it.
In its petition, Aurum avers that the Court has subject matter jurisdiction over this case based on diversity under 28 U.S.C § 1332. Pet. ¶6. The Court may only exercise jurisdiction over a foreign state under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1330 et seq. Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 439 (1989) ("FSIA provides the sole basis for obtaining jurisdiction over a foreign state in federal court . . . .").
Banrisul is a state-owned bank of a political subdivision of Brazil. Under the FSIA, a foreign state is defined to include an "agency or instrumentality" of a political subdivision. 28 U.S.C. § 1603. An "agency or instrumentality" includes corporations with a majority of shares that are owned by a political subdivision. 28 U.S.C. § 1603(b)(2). In an undisputed affidavit, Banrisul states that it is 99.4% owned by the State of Rio Grande do Sul, which ...