Opinion
No. 00 Civ. 6739 (CBM)
April 30, 2003
MEMORANDUM OPINION AND ORDER
In an Opinion and Order issued August 2, 2002, this court ruled on the several motions for summary judgment filed in this case, except one — whether under Thai Law defendant Lehman Brothers Special Financing ("LBSF") possessed an extra-contractual set-off right. Finance One Public Co. Ltd. v. Lehman Bros. Special Financing, Inc., 215 F. Supp.2d 395 (S.D.N.Y. 2002) (hereinafter "Fin One I"). The court was unable to resolve that question because the experts on Thai law each party offered seemed equally distinguished and credible and yet came to opposite conclusions. Id. at 402. Further, although the court was aware that it was empowered by the Federal Rules to resolve the question through its own inquiry, Fed.R.Civ.P. 41.1, the court explained, "[i]n the instant case this is easier said than done, however, because the court's library does not carry Thai reporters, nor are they available on Westlaw or Lexis-Nexis." Id. at 403. Accordingly, the court determined that it would require the assistance of a Special Master in Thai law to resolve the single outstanding issue. Id.
In that decision, the court laid out in detail the factual background to this matter; familiarity with those facts is presumed.
Parties were unable to agree on a prospective Special Master, however, and so, after reviewing the parties' briefings on the several candidates whose names had been offered by the parties, the court wrote to Dr. Sompong Sucharitkul, D.C.L, Associate Dean and Distinguished Professor of International and Comparative Law at Golden Gate University in San Francisco, to inquire whether he was in fact an expert on Thai law and whether he had any affiliations which would compromise his ability to serve without bias. Upon being assured that he was qualified and impartial, the court, by Order dated October 30, 2002, chose Dr. Sompong as Special Master and charged him with assist[ing] the court in determining whether defendant [LBSF] possessed an extra-contractual set-off right under Thai statutory, constitutional and/or administrative law Id.
The Report submitted by the Special Master ("Report") undertakes a lengthy discussion of the facts (contested and uncontested) of the case, the constitutionality of the Thai government's actions with respect to plaintiff Finance One Public Company Limited ("Fin One") and their effect on LBSF, and concludes that "LBSF could be deemed to have a right to set-off which is not unqualified. Assuming its debts to Fin One to be in the approximate amount of US $9.7 million, a Thai court could exercise its judicial discretion in an equitable manner." Report, ¶ 26. Further, the Special Master suggested two possible outcomes of the exercise of this discretion:
This court, according to the Special Master, "would be able to apply applicable Thai law qua law with all the judicial discretion pertaining to Thai Justices in simile casu." Report, ¶ 26. Unquestionably, the determination and application of foreign law is a question for the court. See e.g., Carlisle Ventures, Inc. v. Banco Espanol de Credito, S.A., 176 F.3d 601, 604 (2d. Cir. 1999) (citingCurley v. AMR Corp., 153 F.3d 5, 11 (2d Cir. 1998).
1. Grant LBSF a set-off of roughly $4.3 million, based on a calculation of Fin One's assets and liabilities. Report, ¶ 28. That calculation yields a ratio of 4/9, which, multiplied by $9.7 million, comes to roughly $4.3 million Id., or
2. Grant LBSF a set-off of $5.38 million, based on a calculation of the "average exchange rates taking into account the relevant date, i.e. July 27, 1997 and the prevailing Baht-US$ market rate as recorded by the International Monetary Fund." Report, ¶ 29. That calculation yields a ratio of 25/45, which, multiplied by $9.7 million comes to roughly $5.38 million. Id.
In a letter dated March 31, the court requested that Dr. Sompong clarify his Report, which he did in a Supplemental Report dated April 4, 2003 ("Supplemental Report"). Dr. Sompong explained that owing to the tension between Thai law and International law, to the extent that certain international agreements are enforceable in Thailand, LBSF should neither be allowed the full amount of the set-off it claimed nor denied any set-off whatsoever. Supplemental Report, ¶ 10-26. "The two extremes are not recommended," he wrote. Id., ¶ 26. Dr. Sompong again defended the two solutions suggested in the Report (and enumerated, supra), but implied a preference for the first: "The first solution is authorized by Thai law and could be adopted by the US Court applying Thai law. The second solution is indeterminate." Id.
The Special Master also suggested that a third solution was possible — that of a "fifty-fifty share or half and half." Supplemental Report, ¶ 27. The court deems this approach too arbitrary and notes that, unlike the other solutions offered, it is not backed up by an analysis of Thai law; it is rather, in Dr. Sompong's words, one "last thought that lingers in the mind of the Special Master."Id.
The court agrees that the first solution is preferable. The Special Master's calculations of a 4/9 ratio were an approximation, however, and given the size of the numbers involved there is no reason to forgo a more precise calculation. According to the Liquidator/Petitioner who appeared before Thailand's Central Bankruptcy Court, the bankrupt Fin One's assets amounted to Baht 40,282,637,000, whereas its liabilities amounted to Baht 90,401,302,000. See Reply Aff. of Prof. Sahaton Rattanapijit and Kittivalia Charoensombut-Amorn in Supp. of LBSF's Cross Motion for Sum. J., Ex. 3, Clauses 6(1), 6(2). Using those two numbers yields a slightly different ratio, the decimal value of which is .4456 (rounded to the nearest ten-thousandth), or 44.56 percent. Multiplying that percentage by the amount of set-off claimed by LBSF, $9,651,898.73, LBSF Counterstatement of Undisputed Material Facts, ¶ 59, the court calculates that the set-off allowable for LBSF under Thai Law is $4,300,866.07.
Accordingly, the court rules that LBSF is entitled to claim a set off of $4,300,866.07. The court thanks Dr. Sompong for his invaluable assistance in resolving this matter and orders the parties to pay his fee in equal shares, if they have not done so already. See Fin One I, 215 F. Supp.2d at 403.
SO ORDERED.