Securities

• Pages: 96-103

96 Volume 20, October–December 2014 international law update

© 2014 International Law Group, LLC. All rights reserved. ISSN 1089-5450, ISSN 1943-1287 (on-line) | www.internationallawupdate.com

appeal, it is unclear *162 how the court of appeals

would deal with the question (foreign law being a

question of fact) without remanding to the district

court. Moreover, because subject matter jurisdiction

cannot be waived, if a defect in the court’s subject

matter jurisdiction becomes apparent only after the

litigation, that defect will render the prior litigation

useless. e need for certainty is all the greater here,

as § 1333 vests admiralty jurisdiction exclusively in

the federal courts. 28 U.S.C. § 1333. us, parties

concerned about uncertain federal jurisdiction

cannot, as is generally the case, avoid the problem

by bringing suit in a state court of concurrent (and

unquestionable) jurisdiction. Regardless whether

the litigation is conducted in federal or state

court, the losing party would be able to attack the

judgment after the fact merely by oering expert

evidence that the claim was or was not deemed

maritime under the foreign law.”

“We therefore conclude that a suit to enforce

a foreign judgment may be heard in the federal

admiralty jurisdiction under § 1333 if the claim

underlying the judgment would be deemed

maritime under U.S. law. Accordingly, this suit

to enforce an English judgment comes within the

admiralty jurisdiction of § 1333 if the underlying

claim on the FFA is deemed maritime under the

standards of U.S. law.” [756 F. 3d at 161-162]

e Court vacates the judgment and remands

the case to the district court.

citation: D’Amico Dry Ltd. v. Primera Maritime

(Hellas) Ltd., 756 F. 3d 151 (2nd Cir. 2014).

SECURITIES

Second Circuit reviews whether § 10(b)

of the Securities Exchange Act of 1934

can be applied to a purchase or sale of a

security listed on a foreign exchange or

to a foreign purchase or sale of another

security

From late 2005 through 2007, Porsche

Automobile Holding SE (“Porsche”), a German

automobile manufacturer and an active investor in

various securities and derivatives, gradually increased

its investment in Volkswagen AG (“VW”), another

German automobile manufacturer, whose shares

trade primarily on European stock exchanges. e

German statute known as the “VW Law” limited

the any one VW shareholder’s voting rights to

twenty percent of the total voting rights, regardless

of how may VW shares the shareholder actually

owned. e controlling interest was dened by this

law as eighty percent of the company’s outstanding

shares, or seventy-ve percent of the shares in the

event that other stakeholders agree to vote in favor

of a “domination agreement”. Porsche claimed

publicly that its acquisition of VW shares was

intended to prevent a hostile takeover of VW and

disavowed any intention to obtain a controlling

interest in VW. By the end of 2007, Porsche had

become VW’s largest shareholder, owning thirty-

one percent of the company.

e Plaintis in this case, more than thirty

international hedge funds, convinced that VW

stock would decline in value, employed securities-

based swap agreements pegged to the price of VW

shares. e positions they took through their swap

agreements were that they would gain to the extent

VW stock declined in value and would lose to the

extent it rose.

e Plaintis alleged that as early as February

2008, Porsche had developed a secret plan to

acquire the minimum seventy-ve percent interest

needed to gain control of VW. e problem that

Porsche encountered was that VW’s stock was held

in large part by parties who either did not want to,

or could not sell it, and the amount of VW shares