Thursday, March 5, 2015

The Axis of Conveniens

Aghaian v. Minassian, No. B252326 (D2d8 Feb. 17, 2015)

This case reverses a trial court finding that the courts of Iran are a suitable alternative forum for the purposes of staying a case on forum nonconveniens grounds.

The underlying dispute involves plaintiffs’ efforts to recover properties that were abandoned when their family fled Iran following the fall of the Shah.  Almost twenty years later, the Iranian government determined that the family would be permitted to reclaim the properties. As part of this process, Defendants are alleged to have abused powers of attorney granted to them by plaintiffs’ family in order to transfer the properties to themselves. Plaintiffs sued for breach of fiduciary duty in LA Superior Court. 

Defendants moved to stay that case on forum non conveniens grounds. They argued that Iran was a suitable alternative forum and that the public and private factors favored a stay. In particular, they noted that one defendant was not subject to service in the U.S. and that a California court lacked the power to enforce an order directing the transfer of real property in Iran. The trial court recognized it was a close call, but ultimately granted the motion and stayed the case.

Given the current state of international relations, one might be surprised that a U.S. court would find that the courts of the Islamic Republic of Iran are a suitable alternative forum for the resolution of disputes brought by the descendants of persons who fled that country when the Ayatollah took charge. If so, the court of appeal is with you. Reviewing the matter de novo, it reverses and remands.

On their motion, defendants affirmed that they would submit to the jurisdiction of the Iranian courts and waive any issues with regard to the statute of limitations. In most cases, that is enough to establish the suitability of the other forum for the first step of the analysis and move on to balancing the various factors. But a forum is also unsuitable if the alternative venue lacks an independent judiciary or fails to apply what a U.S. citizen would generally perceive as due process, including an absence of discrimination based on gender or religion.

On this latter point, defendants provided a declaration from an Iranian law expert, who explained how the Iranian civil justice system works. It has some inquisitorial aspects and some adversarial ones, but generally, most of the procedures available in a California state court litigation have an analog under Iranian procedure, and plaintiffs’ claims were cognizable in civil court in Iran.

What defendants did not explain, however, was that the Iranian legal system held up to due process. That is, that its judiciary was independent, and that it was not tainted by invidious discrimination based on gender, religion, or politics. Plaintiffs, on the other hand, submitted substantial evidence to the contrary. Plaintiffs’ three experts opined that the Iranian legal system is biased against women (two of the three plaintiffs are women), requires the application of Islamic law to non-Muslims (plaintiffs are not Muslims), and generally discriminates against those who fled during the Islamic revolution in the late 1970s (which plaintiffs’ family did). The experts further explained that Iranian judges are heavily influenced by executive and religious authorities, as well as other forms of corruption. Defendants did not rebut this testimony.

The court of appeal found plaintiff’s experts convincing, particularly given defendants’ failure to submit contrary evidence that plaintiffs could actyally receive a fair trial. Thus, because Iran was not a suitable alternative forum, staying the case on non conveniens grounds was error.

Finally, as an aside, the court rejects defendants’ contention that the appeal must be rejected because plaintiff did not include a reporter’s transcript. The evidentiary submissions were on declarations and the court’s order was written. The full written record was submitted in plaintiffs’ appendix.  Notably, the only hearing was for argument only; it was not evidentiary. Under the circumstances, the lack of a reporter’s transcript was a non-event.

Reversed and remanded.

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