In Figueiredo Ferraz E Engenharia de Projeto Ltda. v. Republic of Peru, 665 F.3d 384 (2d Cir. 2011), Figueiredo entered an agreement to provide engineering services with a state-controlled water program in Peru. After a fee dispute arose, Figueiredo commenced arbitration in Peru against the water program in accordance with the contract's arbitration clause and was awarded US$21 million in damages in 2005. The water program made payments on the award, but subject to a Peruvian statute that limits the amount that a governmental entity may pay annually to satisfy a judgment to no more than three percent of the entity’s budget.

In 2008, Figueiredo filed a petition in the United States District Court for the Southern District of New York seeking confirmation and enforcement of the award against the water program, the Peruvian Ministry of Housing, Construction and Sanitation, and the Republic of Peru, which had assets in New York.

The Peruvian defendants moved to dismiss on several grounds, including lack of subject matter jurisdiction, forum non conveniens and international comity. The District Court denied the motion to dismiss, but certified its decision for interlocutory review by the Second Circuit.

On appeal, consistent with the Monegasque precedent, the Second Circuit majority confirmed that the district court had jurisdiction under the Panama Convention, and also authority to reject that jurisdiction for reasons of convenience, judicial economy and justice. Having thus confirmed the availability of forum non conveniens as a basis for declining jurisdiction, the court then concluded that the District Court had committed an error in failing to dismiss Figueiredo's petition on that ground.

The court considered Peru's interest in applying its domestic statute as a public interest factor to be weighed in a forum non conveniens analysis, and found it to be a "highly significant public factor warranting dismissal." The Second Circuit also rejected Figuerido's argument that dismissal would disregard the public policy favouring international arbitration. In this case, the general public policy should give way to the "significant public factor of Peru’s cap statute."

The dissent disagreed with both the applicability of the forum non conveniens doctrine on the facts of this case and the majority's conclusion that the relevant considerations weigh in favour of dismissal. The dissent also acknowledged that the precedent established in Monegasque permitted dismissal of an enforcement petition on forum non conveniens grounds, although it also questioned whether Monegasque had been properly decided.

Figueiredo confirms that a court's application of procedural rules such as forum non conveniens, which courts generally apply to determine whether to accept jurisdiction, is compatible with US obligations under the New York Convention and Panama Convention. The amicus brief submitted by the United States at the court's request confirmed that forum non conveniens is an available ground for dismissal under the Panama Convention.

This case also provides an example of how the federal policy favoring arbitration interacts with courts' analysis of public policy concerns under the forum non conveniens standard.

The DC Circuit, on the other hand, does not recognize forum non conveniens as a defense to enforcement of a foreign arbitral award (see Legal Update, US Supreme Court refuses to hear Belize enforcement appeal).