Rogers, Burgun, Shahine & Deschler, Inc. v. Dongsan Construction Co.

598 F. Supp. 754 (1984)

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Rogers, Burgun, Shahine & Deschler, Inc. v. Dongsan Construction Co.

United States District Court for the Southern District of New York
598 F. Supp. 754 (1984)

Facts

Rogers, Burgun, Shahine & Deschler, Inc. (RBSD) (plaintiff) was a New York corporation engaged in architectural design. Dongsan Construction Company, Ltd. (Dongsan) (defendant) was a Korean construction corporation with an office and bank accounts in the United States. In 1982, Saudi Arabia undertook to build a hospital, and, after securing the main contract on this project, Dongsan subcontracted a portion of the project to RBSD. Under the subcontract, RBSD agreed to perform certain services, and Dongsan agreed to pay RBSD 20 percent of the total due when RBSD finished its work. RBSD provided Dongsan a Letter of Guarantee in the full amount of the advance payment to secure advance payment from Dongsan. The subcontract also provided that the parties would refer disputes to arbitration in France under the International Chamber of Commerce (ICC) Rules. A dispute arose with respect to RBSD’s performance, and in November 1984, RBSD filed a lawsuit seeking a preliminary injunction enjoining Dongsan from calling the Letter of Guarantee. Dongsan filed a motion to dismiss or stay pending arbitration of the dispute. RBSD argued that it was entitled to the money owed under the Letter of Guarantee as it had substantially performed under the contract. Dongsan argued that, because it had to complete certain of RBSD’s obligations itself, Dongsan should be permitted to call upon the Letter of Guarantee while the arbitration proceeded in France.

Rule of Law

Issue

Holding and Reasoning (Kram, J.)

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