author: Simons, J.

text:
    Public Employees Federation, AFL-CIO, Respondent-Appellant, v Mario Cuomo, as Governor of the State of New York, et al., Appellants-Respondents; J. Michael Collins, Individually and on Behalf of All Others Similarly Situated, Respondent-Appellant, v Mario Cuomo, as Governor of the State of New York, et al., Appellants-Respondents; Civil Service Employees Association, Inc., Local 1000, AFSCME, AFL-CIO, et al., Appellants-Respondents, v Edward Regan, as Comptroller of the State of New York, et al., Respondents-Appellants.
    Argued June 5, 1984;
    decided June 29, 1984

      POINTS OF COUNSEL

      Robert Abrams, Attorney-General {John Q. Driscoll and Peter H. Schiff of counsel), for appellants-respondents in the first and second above-entitled actions and for respondents-appellants in the third above-entitled action.
    I. Because article 14 of the Retirement and Social Security Law was enacted for a limited duration, no contractual benefits were established under the New York State Constitution (art V, § 7). (Matter of Central School Dist. No. 2 u New York State Teachers’ Retirement System, 23 NY2d 213; Cook v City of Binghamton, 48 NY2d 323; Camardo v Board ofEduc., 79 AD2d 864; Patterson v Carey, 41 NY2d 714; United States Trust Co. v New Jersey, 431 US 1; Birnbaum v New York State Teachers Retirement System, 5 NY2d 1; Roddy v Valentine, 268 NY 228; Kleinfeldt v New York City Employees’ Retirement System, 36 NY2d 95; Connor v City of New York, 5 NY2d 285; Gorman v City of New York, 280 App Div 39.) II. The statutory restriction on the withdrawal of member contributions is not, in any event, an over-all impairment of contractual benefits. The net effect of article 15 is an improvement of pension benefits for Tier III members. {Dunn v City of New York, 7 NY2d 232; Michael v Bellamy, 80 AD2d 147; Heath v New York State Teachers’ Retirement Bd., 79 AD2d 838.) III. The order appealed from lacks support either in decisional authority or rational analysis. IV. Members in Tier III who elected to remain in service after September 1, 1983, the effective date of article 15 of the Retirement and Social Security Law, have no contractual right in the future to withdraw contributions made after that date, except upon reaching age 62 or earlier death. {Birnbaum v New York State Teachers Retirement System, 5 NY2d 1; Matter of Central School Dist. No. 2 v New York State Teachers’ Retirement System, 23 NY2d 213.)

      Arnold W. Proskin for respondent-appellant in the first and second above-entitled actions.
    I. The new Tier III legislation (Retirement and Social Security Law, § 613, subd c) violates section 7 of article V of the New York State Constitution which prohibits diminution of pension rights. {Roddy v Valentine, 268 NY 228; Birnbaum v New York State Teachers Retirement System, 5 NY2d 1; Matter of Day v Mruk, 307 NY 349; Kleinfeldt v New York City Employees’ Retirement System, 36 NY2d 95; Matter of Ayman v Teachers’ Retirement Bd., 9 NY2d 119; Kranker v Levitt, 30 NY2d 574; Matter of Dormer v New York City Employees’ Retirement System, 33 NY2d 413; Matter ofMenna u New York City Employees’ Retirement System, 110 Mise 2d 1065; Matter of Carroll vNew York City Employees’ Retirement System, 101 Mise 2d 938; Matter of Rosenthal v New York State Employees’ Retirement System, 89 Mise 2d 616.) II. The new Tier III legislation violates section 10 of article I of the Constitution of the United States which prohibits a State from passing a law impairing the obligation of contracts. {Allied Structural Steel Co. v Spannaus, 438 US 234; United States Trust Co. v New Jersey, 431 US 1.) III. The new Tier III legislation violates section 6 of article I of the New York State Constitution and the Fourteenth Amendment of the United States Constitution both of which prohibit the deprivation of life, liberty or property without due process of law. (Patterson v Carey, 41 NY2d 714.) IV. The new Tier III legislation violates section 7 of article I of the New York State Constitution which prohibits the taking of property without just compensation. V. The mandate for the refund of contributions made by original Tier III employees resulting from the unconstitutionality of the new Tier III legislation must not be limited to contributions made prior to the effective date of the statute.
    I. The 1983 Tier III legislation has impaired and diminished plaintiffs’ benefits in violation of section 7 of article V of the New York State Constitution. {Roddy v Valentine, 268 NY 228; Birnbaum v New York State Teachers Retirement System, 5 NY2d 1; Kleinfeldt v New York City Employees’ Retirement System, 36 NY2d 95; Kranker v Levitt, 30 NY2d 574; Matter of Weber v Levitt, 41 AD2d 452, 34 NY2d 797; Matter ofColler v State Univ. ofN. Y., 80 AD2d 166.) II. The contractual rights and benefits of Tier III employees who joined the State retirement system prior to September 1, 1983 are fixed and permanent notwithstanding the alleged temporary nature of the conferring statute. {Matter of Central School Dist. No. 2 v New York State Teachers’ Retirement System, 23 NY2d 213.) III. The 1983 Tier III amendments violate section 10 of article I of the United States Constitution which prohibits a State from passing a law impairing the obligations of contracts. (Bim-baum v New York State Teachers Retirement System, 5 NY2d 1; United States Trust Co. v New Jersey, 431 US 1.) IV. Subdivision c of section 613 and subdivision c of section 606 of the Retirement and Social Security Law violate the Fifth and Fourteenth Amendments of the United States Constitution and section 7 of article 1 of the New York State Constitution.

      Richard R. Rowley and Robert S. Hite for New York State Inspection, Security and Law Enforcement Employees, District Council 82, AFSCME, AFL-CIO, amicus curiae in the first and second above-entitled actions.
    I. The enactment of subdivision c of section 613 of the Retirement and Social Security Law diminishes and impairs the retirement benefits guaranteed to members who joined a public retirement system on or after July 1, 1976 and before September 1, 1983 and is violative of section 7 of article V of the New York State Constitution. (Roddy v Valentine, 268 NY 228; Matter of Day v Mruk, 307 NY 349; Birnbaum v New York State Teachers Retirement System, 5 NY2d 1; Kranker v Levitt, 30 NY2d 574; Matter of Donner v New York City Employees’ Retirement System, 33 NY2d 413; Matter of Weber v Levitt, 34 NY2d 797; Kleinfeldt v New York City Employees’ Retirement System, 36 NY2d 95; Matter of Central School Dist. No. 2 v New York State Teachers’ Retirement System, 23 NY2d 213; Mutterperl v Levitt, 89 Mise 2d 428.) II. The application of subdivision c of section 613 of the Retirement and Social Security Law to members who joined a public retirement system on or after July 1, 1976 and before September 1, 1983 constitutes an impairment of contract in violation of section 10 of article I of the United States Constitution and further constitutes a taking without just compensation and due process of law in violation of the Fourteenth Amendment to the United States Constitution and sections 6 and 7 of article I of the New York State Constitution. {Home Bldg. & Loan Assn, v Blaisdell, 290 US 398; United States Trust Co. v New Jersey, 431 US 1; Allied Structural Steel Co. v Spannaus, 438 US 234; Bennett v County of Nassau, 47 NY2d 535; West v Chesapeake & Potomac Tel. Co., 295 US 662; Patter

      son v Carey, 41 NY2d 714; Matter of City of New York [Brookfield Refrig. Corp.], 58 NY2d 532.)

      Frederick A. O. Schwarz, Jr., Corporation Counsel (Michael Gage and Margaret G. King of counsel), for City of New York, amicus curiae in all three above-entitled actions.
   OPINION OF THE COURT

Simons, J.

These appeals challenge the constitutionality of subdivision c of section 613 and subdivision c of section 606 of article 15 of the Retirement and Social Security Law (L 1983, ch 414, § 1, eff Sept. 1,1983). Subdivision c of section 613 limits the rights of State employees hired on or after July 1, 1976 (commonly referred to as Tier III employees) to withdraw contributions from the retirement system made by them after July 1, 1976. Subdivision c of section 606 amends the formula for determining the amount of ordinary death benefits payable to the estates of Tier III employees upon their death.

Public Employees Federation v Cuomo and Collins v Cuomo are two article 78 proceedings converted to actions for a declaratory judgment and consolidated by order of Special Term. Civil Serv. Employees Assn. v Regan is a declaratory judgment action. In each action Special Term granted plaintiffs’ motions for summary judgment in part, declaring that subdivision c of section 613 of the Retirement and Social Security Law violated section 7 of article V of the New York Constitution. It denied plaintiff CSEA’s claim that subdivision c of section 606 was similarly invalid and it denied plaintiffs’ applications for a declaration that Tier III employees were entitled to recover contributions to the retirement system made after September 1, 1983. These cross appeals followed and are before us on consolidated direct appeals from those judgments (CPLR 5601, subd [b], par 2).

The case turns upon whether the statutes in question unconstitutionally diminish or impair the pension benefits of Tier III employees. We hold that they do and we modify the judgments of Special Term in both actions to declare that Tier III employees may withdraw their contributions after September 1, 1983 and the judgment in CSEA v Regan to declare that subdivision c of section 606 is unconstitutional as to the estates of Tier III members.

The facts are undisputed. Under section 517 of article 14 of the Retirement and Social Security Law, employees who joined or rejoined the New York State public retirement system on or after July 1,1976, and whose service with the State terminated before the completion of the 10-year vested period, were entitled to withdraw at the time of their termination from service contributions previously made to the retirement system. Subdivision c of section 613 changed that to require that the contributions to the retirement system by Tier III employees may be refunded only when the employee dies or reaches age 62. Refunds, when made, are to include 5% interest compounded annually.

Subdivision c of section 606 of article 15 reduces the ordinary benefits payable to the estate of most Tier III employees who die after September 1, 1983 compared to benefits previously authorized and computed pursuant to subdivision a of section 508 of article 14. Under subdivision a of section 508, the beneficiaries of a Tier III employee who died before reaching age 60 were entitled to a lump-sum ordinary death benefit equal to the number of years of credited service, up to a maximum of three years, multiplied by the final annual salary of the employee, with maximum payments of $20,000 for one year of service, $40,000 for two years of service and $50,000 for three years of service. Subdivision c of section 606 changes this. It provides that ordinary death benefits shall be computed by multiplying ⅛ of the wages earned by a member during his last 12 months of active service by the number of years of his total service credit, not in excess of 36 years.

Article 14 was enacted in 1976 and effective January 1, 1977. Section 520 of article 14 initially provided that the benefits available to members of the State retirement system to whom article 14 was applicable would not be available after June 30, 1977. Subsequent amendments extended its duration to 1979 (L 1977, ch 347), to 1981 (L 1979, ch 321), to 1982 (L 1981, ch 381), and to June 30, 1983 (L 1982, ch 463). Section 615 of article 15 extended the expiration date of article 14 to June 30, 1985 (L 1983, ch 414, § 7) while providing it did not apply to members to whom article 15 applied on its effective date, September 1, 1983.

The plaintiff and petitioner organizations represent public employees who are members of the New York State Retirement System. Petitioner J. Michael Collins and plaintiff Donna Rapisarda, one of the plaintiffs in CSEA v Regan, became members of the New York State Retirement System after July 1, 1976. Petitioner Collins is an Assistant District Attorney of Monroe County. He was still employed in that office at the time that he commenced this proceeding seeking to protect his right to obtain a refund of his contributions to the retirement system should he leave public service prior to the time his pension vested. Ms. Rapisarda resigned from employment with the State on August 31, 1983. She applied for a refund of her contributions to the retirement system on September 1, 1983 but her application was denied under authority of article 15 of the Retirement and Social Security Law because she was not 62 years of age. Plaintiffs Susan L. Taft, Leslie B. Taft, and Robert G. Taft, plaintiffs in CSEA v Regan, are designated beneficiaries of the estate of Roger Warren Taft, a Tier III employee who died on September 3, 1983. They challenge the constitutionality of the change in ordinary death benefits effected by subdivision c of section 606 of article 15 of the Retirement and Social Security Law.

Section 7 of article V of the Constitution of the State of New York was passed in response to this court’s determination that a member’s rights to the benefits or pension provided by a public retirement system do not become contractuál until the statutory conditions for retirement from civil service have been met (see Roddy v Valentine, 268 NY 228). It provides: “After July 1, nineteen hundred forty, membership in any pension or retirement system of the state or of a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired.”

The court has examined the language of the section several times since its adoption to determine whether statutory changes in the computation or availability of benefits of membership in the State pension or retirement system violate it. Thus, in Birnbaum v New York State Teachers Retirement System (5 NY2d 1), we considered the adoption of an actuarial table which reduced by approximately 5% the annuity benefits available to members of the New York State Teachers’ Retirement System compared to benefits paid pursuant to an actuarial table in use on the effective date of the amendment. We held the change violated section 7 of article V. Noting that “[t]he purpose of the [constitutional] amendment was to fix the rights of the employee at the time he became a member of the system”, we held that application of the updated actuarial table to members who entered the system before the effective date of the new tables effected a diminution and impairment of the benefits of the retirement system in violation of the State Constitution (id., at p 9). We have also nullified attempts to redefine the factors considered in the computation of the final average salary of a system member made by State officials in . an effort to control burdensome increases in retirement benefits. If the changes were applied retroactively to prior members of a public retirement system, they were held unconstitutional on the theory that a member’s rights were frozen as of the date of employment and that any changes lessening benefits must be made prospectively (see Kleinfeldt v New York City Employees’ Retirement System, 36 NY2d 95; Kranker v Levitt, 30 NY2d 574; Matter of Weber v Levitt, 34 NY2d 797, affg on opn at App Diy 41 AD2d 452).

The State contends that petitioners’ claim must fail because article 14 of the Retirement and Social Security Law was enacted for a limited duration. Thus, it claims Tier III employees had no reasonable expectation that the constitutional benefits were permanent or protected from impairment by the Constitution. The contention was rejected in Matter of Central School Dist. No. 2 v New York State Teachers’ Retirement System (23 NY2d 213) in which the court examined changes in the “Death-Gamble” benefit provided for in the Retirement and Social Security Law. The provision had initially been enacted for a single year but was extended annually and was in effect at the time of the court’s decision. The petitioners, local school districts, contended that the system’s retirement board unjustifiedly assumed that the “Death-Gamble” benefit would be extended indefinitely when it computed the amount of the school districts’ liability for contributions to a pension accumulation fund on behalf of their employees. Chief Judge Fuld, writing for the majority, concluded:

“The argument lacks force. The board’s recognition of the true nature of this liability as a permanent addition to the fund’s obligations was completely justified, if not required.

“Following the enactment of the constitutional provision prohibiting reductions in pension benefits (N.Y. Const., art. V, § 7), it has been customary for the Legislature to enact all new benefits on a year-to-year basis. The purpose of this is to permit the Legislature to subsequently change a provision which turns out to be unworkable. If the legislation were not on a year-to-year basis, it would be constitutionally impermissible to later make a change because of the vested rights acquired by the system’s members. This does not mean, however, that the benefits are intended to be temporary [emphasis added]. As a matter of fact, no benefit so enacted has later been discontinued. It would be foolhardy to assume that a benefit such as the ‘Death-Gamble’ will be discontinued after a year and to make no provision for the financing of future benefits” {id., at p 232).

Although the impairment of members’ benefits was not at issue in Central School Dist. No. 2, the court expressly stated that a limitation on the duration of a statute which confers a benefit does not render the benefit a temporary one. The same point was made directly in Mutterperl v Levitt (89 Misc 2d 428, 432-433, affd 41 NY2d 956) in which we approved a holding that a statute which conferred upon a member, at the time he first joined the retirement system, the right to re-retire two years after rejoining the system was not rendered conditional by the limited duration of the statute. The logic of thus interpreting statutorily conferred benefits as permanent despite the limited duration of the statute is apparent. A contrary interpretation would render such a provision an unconstitutional impairment, conferring a benefit and then, upon expiration of the statute, taking it away. The Legislature does not have to grant pension benefits but once it does, for however short a period, they may not be impaired by a limitation as to time in the statute creating them. It follows that the right of Tier III members to the return of their contributions upon termination of their service with the State before the 10-year vested period may not be impaired by the effectuation of article 15 on September 1, 1983. Moreover, Special Term’s order limiting the refund of contributions made by nonvested Tier III employees to contributions made up to September 1,1983 was error. The right to a return of all contributions made in reliance on section 517 of article 14 was constitutionally protected.

We also disagree with Special Term’s determination that subdivision c of section 606 of article 15 of the Retirement and Social Security Law did not violate the Constitution because no contributions were made toward the death benefit by the employee. It is undisputed that the beneficiaries of Tier III employees became entitled to the death benefit pursuant to subdivision a of section 508 of article 14 upon the death of the employee before age 60. The death benefit was therefore a benefit of membership in the retirement system rendered contractual in nature by section 7 of article V, regardless of whether specific funds were earmarked for a death benefit fund or not.

Accordingly, the judgment of Special Term in Public Employees Federation v Cuomo should be modified to declare that subdivision c of section 613 of article 15 of the Retirement and Social Security Law violates section 7 of article V of the New York State Constitution and is unconstitutional insofar as it purports to abrogate the rights of employees hired on or after July 1, 1976 and before September 1, 1983 to the return of contributions to the New York State Employees’ Retirement System made by them after July 1, 1976 and that such employees terminated before achieving 10 years’ service shall be entitled to return of contributions made on or after July 1, 1976, including contributions made after September 1,1983, and as so modified, affirmed, with costs to plaintiffs.

The judgment of Special Term in Civil Serv. Employees Assn. v Regan should be modified to declare that subdivision c of section 613 of article 15 of the Retirement and Social Security Law violates section 7 of article V of the New York State Constitution and is unconstitutional insofar as it purports to abrogate the rights of employees hired on or after July 1,1976 and before September 1,1983 to the return of contributions to the New York State Employees’ Retirement System made by them after July 1, 1976 and that such employees terminated before achieving 10 years’ service shall be entitled to return of contributions made on or after July 1, 1976, including contributions made after September 1, 1983, and to further declare that subdivision c of section 606 of the Retirement and Social Security Law violates section 7 of article V of the New York State Constitution and is unconstitutional insofar as it reduces benefits payable on the death of employees hired on or after July 1,1976 and before September 1,1983, and, as so modified, affirmed, with costs to plaintiffs.

Judges Jasen, Jones, Wachtler, Meyer and Kaye concur; Chief Judge Cooke taking no part.

In each case: Judgment modified in accordance with the opinion herein and, as so modified, affirmed, with costs to plaintiffs.

      . “§ 613. Member contributions * * *
      “c. Notwithstanding any other provision of law, in the event membership in a public retirement system shall terminate * * * any contributions remaining to the credit of the member shall be refunded upon application when he attains age sixty-two or at death, whichever occurs first, as specified by the rules or regulations of the system involved. For the purpose of such refund, such contributions, shall be credited with interest at the rate of five percent per annum compounded annually until the earlier of the date he attained age sixty-two or the date of death”.

      . “§ 606. Ordinary death benefits * * *
      “c. The ordinary death benefit shall be computed by multiplying one-twelfth of the wages earned by such member during his last twelve months of active service while a member by the number of years of his total service credit, not in excess of thirty-six years.”


source: Caselaw Access Project

author: Wachtler, J.

license: Public Domain

text:
    In the Matter of Citiwide News, Inc., Respondent, v New York City Transit Authority et al., Appellants.
    Argued June 6, 1984;
    decided July 3, 1984

      POINTS OF COUNSEL

      Gerald D. Roth, Stephen Sussman and Seth J. Cummins for New York City Transit Authority and another, appellants.
    The master license is not subject to the competitive bidding requirements of subdivision 1 of section 1209 of the Public Authorities Law. (.Matter ofExley v Village ofEndi-cott, 51 NY2d 426; Matter of New York City Ch. v Fabber, 73 Mise 2d 859, 41 AD2d 821; BusTop Shelters v City of New York, 99 Mise 2d 198; Matter of Signacon Controls v Mulroy, 32 NY2d 410; Albion Ind. Center v Town of Albion, 62 AD2d 478; Jered Contr. Corp. v New York City Tr. Auth., 22 NY2d 187; Admiral Realty Co. v City of New York, 206 NY 110.)

      Stephen H. Penn and Brian Weiss for Kapoor Brothers, Inc., appellant.
    I. The agreement at issue is not a “contract for public work” within the meaning of section 1209 of the Public Authorities Law, but an agreement otherwise characterized in the law and authorized by subdivision 2 of section 1202 and section 1204 of the Public Authorities Law. (New York City Tr. Auth. v Loos, 2 Mise 2d 733; New York City Tr. Auth. v Quill, 48 Mise 2d 940; Matter of Subway-Surface Supervisors Assn, v New York City Tr. Auth., 56 AD2d 53; Collins v Manhattan & Bronx Surface Tr. Operating Auth., 116 Mise 2d 6; Matter of Andrews v O’Grady, 44 Mise 2d 28; Weiner u Metropolitan Transp. Auth., 55 NY2d 175; Leeds v Metropolitan Transp. Auth., 117 Mise 2d 329; Civil Serv. Forum v New York City Tr.

      Auth., 3 Mise 2d 346; Clark v Young, 18 AD2d 653; Madden v Queens County Jockey Club, 296 NY 249.) II. If the agreement at issue were a “contract for public work” within the meaning of section 1209 of the Public Authorities Law, it would fall under the “special skill or training” exception to that provision, and bidding would not be required. {Jered Contr. Corp. v New York City Tr. Auth., 22 NY2d 187; Matter ofDugro, 50 NY2d 513; Depot Constr. Corp. v City of New York, 46 NY2d 859; Matter of Marino v Town of Ramapo, 68 Mise 2d 44; Harlem Gas-Light Co. v City of New York, 33 NY 309; Williams v Bryant, 53 AD2d 229; Albion Ind. Center v Town of Albion, 62 AD2d 478, 45 NY2d 710; Marine Midland Trust v Village ofWaverly, 42 Mise 2d 704, 21 AD2d 753; People ex rel. Smith v Flagg, 17 NY2d 584.)

      Herman Badillo, Kenneth G. Schwarz and Stuart F. Gruskin for respondent.
    I. The master license is subject to the competitive bidding requirements of subdivision 1 of section 1209 of the Public Authorities Law. {Matter of Exley v Village ofEndicott, 51 NY2d 426; BusTop Shelters v City of New York, 99 Mise 2d 198; Matter of Signacon Controls v Mulroy, 32 NY2d 410; Matter ofHauger v Earl, 275 App Div 437.) II. The need for flexibility cannot justify excepting the master license from the requirements of competitive bidding. {Matter ofExley v Village ofEndicott, 51 NY2d 426; Jered Contr. Corp. v New York City Tr. Auth., 22 NY2d 187; Matter of Signacon Controls v Mulroy, 32 NY2d 410; Matter of Carr v New York State Bd. of Elections, 40 NY2d 556; Matter ofDe Peyster, 210 NY 216; Lawrence Constr. Corp. v State of New York, 293 NY 634; People v Olah, 300 NY 96.) III. The master license does not fall under the “special skill or training” exception to the competitive bidding laws. {Lefkowitz v Lebensfeld, 51 NY2d 442; Matter of State of New York v Avco Fin. Serv., 50 NY2d 383; Rogers v Dorchester Assoc., 32 NY2d 553; Matter of Burroughs Corp. v New York State Higher Educ. Servs. Corp., 91 AD2d 1078; American Totalisator Co. v Western Regional Off-Track Betting Corp., 44 AD2d 750.)

      Frederick A. O. Schwarz, Jr., Corporation Counsel {June A. Witterschein and Stephen J. McGrath of counsel), for City of New York, amicus curiae.

    The total character of the arrangement entered into by the Authority and Kapoor is a license to operate newsstand concessions in several subway stations. Therefore, the fact that the license agreement contains the requirement that Kapoor maintain and repair existing concession stands and also install some new ones, does not transform the license into a “public work” which is subject to the competitive bidding laws. (.Matter of Exley v Village of Endicott, 51 NY2d 426; Trustees of Southampton v Jessup, 162 NY 122; Pajak u Pajak, 56 NY2d 394; Matter ofSignacon Controls v Mulroy, 32 NY2d 410; BusTop Shelters v City of New York, 99 Mise 2d 198.)
   OPINION OF THE COURT

Wachtler, J.

Subdivision 1 of section 1209 of the Public Authorities Law provides that a contract for public work in excess of a specified cost may be entered into by the New York City Transit Authority (Authority) only after competitive bidding procedures have been followed. This appeal raises the question whether a license agreement, having as its predominant focus the use of real property and the operation of a specified business thereon, is subject to the competitive bidding requirements by reason of the agreement’s provision that the licensee must construct certain improvements and rehabilitate or repair existing facilities in connection with its use of the property.

In the latter part of 1982, the Authority advertised its intention to seek qualified persons or firms to offer proposals for a long-term license to operate newsstands in the New York City subway system. Interested parties were invited to submit proposals. Those who qualified, in terms of their financial and business ability to undertake the project, would be permitted to submit bids for the license. Several firms were found to be qualified, including petitioner Citiwide News, Inc. (Citiwide), and respondent Ka-poor Brothers, Inc. (Kapoor).

Thereafter, the Authority issued to each of the qualified firms a formal invitation to submit bids. The Request for Proposals (RFP), in addition to setting forth the requirements for the operation and maintenance of the newsstands, details the obligations to be undertaken by the proposer in connection with the rehabilitation of existing newsstands and the construction of additional facilities. The RFP made clear that the Authority believed that it had no obligation to offer the license through a competitive bid process. Thus, the contract would not necessarily be awarded to the highest bidder; rather, the proposals submitted would be used as a basis for negotiations. Proposals were to be evaluated on the basis of several criteria, including: (1) compensation; (2) the proposer’s ability to operate the newsstands in accordance with professional business management standards; and (3) the proposer’s plan for construction and rehabilitation of the newsstands. Proposers were permitted to submit a bid for the license on the basis of either a 10- or 15-year term.

Citiwide submitted a proposal for a term of 10 years, offering to compensate the Authority for the license in the amount of $22,321,000. Kapoor’s proposal, based upon a 15-year term, provided for payments to the Authority of approximately $49,292,000. The Authority determined that Kapoor was the preferred proposer, as it had rated considerably higher than the others in all categories except compensation. Following negotiations, the Authority and Kapoor reached agreement, which included payments to the Authority in the amount of $62,210,000 (subject to potential downward adjustments), and the “Master License to Install, Operate, and Maintain Newsstands at Approved Locations on the New York City Transit Authority Rapid Transit System” was executed accordingly.

In addition to setting forth such provisions as the term of the license, the compensation to be paid, and the licensee’s obligations with respect to the maintenance of the property, the master license regulates the conduct of business at the subway station newsstands in some detail. Thus, the license details the items that may be sold at the newsstands and those that must be provided, the reports and records to be maintained, management and supervision requirements, the licensee’s obligations with respect to utilities, insurance, safety and sanitary conditions, and sets forth a sublicense agreement to be used should a limited number of the newsstands be subleased pursuant to the terms of the agreement. The master license also contains the parties’ agreement concerning the required construction of new newsstands, the estimated cost of which is $2 million. Pursuant to the agreement, all newsstands, as well as improvements to existing stands, become the property of the Authority when made.

Citiwide commenced this article 78 proceeding, naming the Authority and Kapoor as respondents, challenging the validity of the master license upon the ground that the Authority failed to follow competitive bidding procedures. Special Term dismissed the petition, holding that the award of the master license did not involve the expenditure of public money and thus was not subject to public bidding requirements. The Appellate Division reversed, by a divided court, holding that the construction aspect of the license involved an indirect expenditure of public funds for a public work, requiring that the contract be publicly bid. We now reverse. Notwithstanding the fact that an indirect expenditure of public money is involved, the Authority was not required to follow competitive bidding procedures before making the contract, inasmuch as the “total character of the arrangement” is clearly that of a license agreement for the maintenance and operation of newsstands and not that of a “contract for public work”.

The public bidding requirements applicable to the Authority are found in section 1209 of the Public Authorities Law. Subdivision 1 of that section provides, in part: “Any contract for public work, except where there is an emergency involving danger to life or property, the estimated cost of which exceeds twenty thousand dollars shall be made by the authority only upon public letting founded on sealed bids”. Neither this statute nor. that applicable to political subdivisions (General Municipal Law, § 103, subd 1), offers any definition of “contract for public work” or otherwise indicates the specific nature of the contracts falling within the public bidding requirement. It is clear, however, that a contract in the nature of a lease by a public entity as lessor or by which a franchise or license is granted need not, generally, be subjected to the competitive bidding process, for such a contract does not ordinarily involve an expenditure of public money (e.g.,BusTop Shelters v City of New York, 99 Misc 2d 198, 203; 1982 Opns St Comp No. 82-237). The issue in the present case is whether the Authority’s license agreement must be considered a contract for public work insofar as it requires the construction of new facilities in connection with the licensee’s undertaking to operate the newsstands.

We note, first, our agreement with the Appellate Division that the license contemplates what must be viewed as an indirect expenditure of public money. As we made clear in Matter of Signacon Controls v Mulroy (32 NY2d 410, 416): “A contract which provides for a lesser income to a governmental unit than a competing contract might provide, is an ‘expenditure’ within the meaning of [the competitive bidding statute]”. In that case we expressed concern that public officials not be permitted to do indirectly what they may not do directly, and that the salutary purposes of the public bidding statutes not be evaded by merely altering the nature of an arrangement to bring it technically outside the scope of the requirements. In the present case, the Authority required as part of the arrangement that the licensee agree to undertake certain improvements in connection with its operation under the license. Certainly, this obligation, requiring an expenditure by the licensee of some $2 million, had an impact upon the amount of compensation the licensee was willing to pay the Authority. That an expenditure of public funds, direct or indirect, exists, however, is not sufficient by itself to trigger the requirements of section 1209; we must also ascertain whether the arrangement involves a “contract for public work” to which the statute is applicable.

It is not, of course, always clear whether the Legislature intended its various competitive bidding statutes to be applicable to given transactions. We were recently confronted with such a question in Matter of Exley v Village of Endicott (51 NY2d 426). There, a municipality had entered into an arrangement with New York Telephone Company for the provision of certain telephone terminal systems. The agreement had attributes of both a lease and a sale. In the latter, the transaction was subject to public bidding as a “purchase contract” (General Municipal Law, § 103, subd 1; see, also, Public Authorities Law, § 1209, subd 2). Given what we termed the “hybrid nature” of the transaction, we deemed it necessary to examine the (p 432) “total character of the arrangement”. Finding significant the facts that title to the telephone equipment never passed to the municipality, that the telephone company assumed the risk of loss for certain events beyond the customer’s control and assumed the obligation to service the equipment, and that there was no hint of subterfuge in the arrangement, we concluded that the transaction was in the nature of a true lease and thus was not within the scope of the competitive bidding statute.

We believe that a similar approach must be taken to the problem posed by the matter now before us. Although the same type of ambiguity present in Exley does not affect the license here, we are faced with a similar difficulty in ascertaining the reach of the public bidding statute. In this connection, we have recognized the importance of ensuring full compliance with such statutes, which have as their aims the elimination of extravagance and improvidence, as well as prevention of the opportunity for fraud, favoritism or corruption in the awarding of public contracts. (Matter of Signacon Controls v Mulroy, 32 NY2d 410, 414, 415, supra). Balanced against this important policy, however, is the equally important recognition that competitive bidding requirements impose a substantial restriction upon the activities of public entities and must be extended no further than reasonably contemplated by the Legislature (Matter of Exley v Village of Endicott, 51 NY2d 426, 431, supra). As in Exley, we therefore deem it appropriate to look to the “total character of the arrangement” in determining whether the master license, having attributes of both a typical license and a public work contract, falls within the scope of the competitive bidding statute.

The basic structure of the license agreement is directed to providing that in return for payment to the Authority, Kapoor is permitted to use the Authority’s property to conduct a specified business. Intrinsic to the operation of this license is the need for adequate facilities to carry out the proposed business. The Authority’s purpose in entering into this arrangement is to raise substantial revenues, while providing a convenience for subway passengers. The purpose is clearly not to construct or acquire title to the newsstands. Indeed, the physical structures have no utility separate and distinct from the licensing aspect of the arrangement. Given the potential difficulties faced by the Authority in carrying out its subway station modernization program and the need to coordinate other proposed construction with the program, the only practical approach was to have the maintenance, operation and construction aspects of the newsstand project carried out by the same entity.

Moreover, the determination of who has title to the improvements and new construction, which may be critical when the question presented is whether a given transaction is a lease or a purchase (see Matter of Eodey v Village of Endicott, 51 NY2d 426, supra), does not take on the same importance where a license to use real property is involved. As noted above, it is surely not the purpose of the arrangement that the Authority acquire title to these facilities. The ownership of the newsstands appears to be of only incidental benefit to the Authority. Indeed, it is not at all inconsistent with the character of a license that the Authority would provide for the acquisition of title to improvements made to its real property during the term of the license. In any event, this factor is insufficient, by itself, to alter the essential character of the transaction. We conclude that an examination of this arrangement reveals its total character as a license agreement, the focus and purpose of which are to provide for the maintenance and operation of newsstands in the subway system. That the agreement’s proper performance requires that certain Authority facilities be rehabilitated and that new facilities be constructed on Authority property does not alter its essential character from that of a license agreement into a contract for public work. Thus, the master license cannot be said to fall within the scope of section 1209 of the Public Authorities Law, and competitive bidding procedures were not mandated.

Accordingly, the order of the Appellate Division should be reversed and the petition dismissed, with costs.

Chief Judge Cooke and Judges Jasen, Jones, Meyer, Simons and Kaye concur.

Order reversed, etc.


author: Simons, J. Meyer, J.

text:
    Islamic Republic of Iran, Appellant, v Mohammed Reza Pahlavi, Respondent, and Farah Diba Pahlavi, Defendant.
    Argued June 6, 1984;
    decided July 5, 1984

      POINTS OF COUNSEL

      Brian O’Dwyer, Paul O’Dwyer, Gary Silverman, Abram Chayes and Bruno A. Ristau for appellant.
    I. The Algerian Accords, by which the United States, in the exercise of its powers over foreign affairs, assured Iran of the availability of a United States judicial forum for the adjudication of its claims against the Shah, preclude the dismissal of this action. {Dames & Moore v Regan, 453 US 654; United States v Belmont, 301 US 324; United States v Pink, 315 US 203; Itel Corp. v M/S Victoria U, 710 F2d 199; Itek Corp. v First Nat. Bank, 704 F2d 1; Behring Int. v Imperial Iranian Air Force, 699 F2d 657; United States v Curtiss-Wright Corp., 299 US 304.) II. Under controlling precedents and all the circumstances of this case, dismissal of this action was an abuse of discretion. {Gulf Oil Corp. v Gilbert, 330 US 501; Irrigation & Ind. Dev. Corp. v Indag S.A., 37 NY2d 522; Silver v Great Amer. Ins. Co., 29 NY2d 356; Varkonyi v S. A. Empresa De Viacao Airea Rio Grandense [Varig], 22 NY2d 333; Taylor v Interstate Motor Frgt. System, 309 NY 633; Blais v Beyo, 60 NY2d 679; Belachew v Michael, 59 NY2d 1004; Meritum Corp. v Lawyers Tit. Ins. Co., 57 NY2d 765; Wienke v Wienke, 96 AD2d 1136; Moliendo Equip. Co. v Sekisan Trading Co., 56 AD2d 750.)

      Roger Boyle for Farah Diba Pahlavi, respondent.
    I. New York is an inappropriate forum. {Luther v Borden, 7 How [48 US] 1; Massachusetts v Laird, 400 US 886; Ferguson v Neilson, 58 Hun 604; Pietraroia v New Jersey & Hudson Riv. Ry. & Ferry Co., 197 NY 434; Varkonyi v S.A. Em-presa De Viacao Airea Rio Grandense [Varig], 22 NY2d 333; Bata v Bata, 304 NY 51; Robinson v Oceanic Steam Nav. Co., 112 NY 315; Silver v Great Amer. Ins. Co., 29 NY2d 356; Martin v Mieth, 35 NY2d 414; Westwood Assoc. v Deluxe Gen., 53 NY2d 618.) II. The unavailability of an alternative forum is irrelevant. {Gulf Oil Corp. v Gilbert, 330 US 501; Alcoa S. S. Co. v M/V Nordic Regent, 654 F2d 147; Noto v Cia Sécula di Armanento, 310 F Supp 639.) III. The court lacks personal jurisdiction over defendant. {International Shoe Co. v Washington, 326 US 310; Shaffer v Heitner, 433 US 186; World-Wide Volkswagen Corp. v Woodson, 444 US 286; Rush v Savchuk, 444 US 320.) IV. The Algerian Accords in no way prevent dismissal of this case. (Chicago & Southern Air Lines v Waterman Corp., 333 US 103; Delay v United States, 602 F2d 173, 444 US 1012; United States v Nixon, 418 US 683; Banco Nacional de Cuba v Sabbatino, 376 US 398; Underhill v Hernandez, 168 US 250; Sullivan v State of Sao Paolo, 122 F2d 355; Stephen v ZivnostenskaBanka, 15 AD2d 111, 12 NY2d 781; Cummings v State of Missouri, 4 Wall [71 US] 277.)
   OPINION OF THE COURT

Simons, J.

Plaintiff, the Islamic Republic of Iran, brings this action against Iran’s former ruler, Shah Mohammed Reza Pahlavi, and his wife, Empress Farah Diba Pahlavi. It alleges in its complaint that defendants accepted bribes and misappropriated, embezzled or converted 35 billion dollars in Iranian funds in breach of their fiduciary duty to the Iranian people and it seeks to recover those funds and 20 billion dollars in exemplary damages. It asks the court to impress a constructive trust on defendants’ assets located throughout the world, for an accounting of all moneys and property received by the defendants from the government of Iran, and for other incidental relief.

The action was commenced in November, 1979 by substituted service on the Shah made at New York Hospital where he was undergoing cancer therapy. The Empress was personally served at the same time at the New York residence of the Shah’s sister, Ashraf Pahlavi. Thereafter, defendants moved to dismiss the complaint alleging that it raised nonjusticiable political questions, that the court lacked personal jurisdiction due to defective service of process on them and that the complaint should be dismissed on grounds of forum non conveniens. Special Term granted defendants’ motion based on forum non conveniens concluding that the parties had no connection with New York other than a claim that the Shah had deposited funds in New York banks, a claim which it found insufficient under the circumstances to justify the court in retaining jurisdiction. A divided Appellate Division affirmed, Justice Fein arguing in dissent that jurisdiction must be assumed because no other forum was available to plaintiff.

On this appeal plaintiff claims that the courts below erred, that the New York courts must entertain this action because the record does not indicate that there is any alternative forum available because the United States Government undertook to guarantee plaintiff an American forum to litigate its claims against the former royal family in the hostage settlement agreements between it and plaintiff known as the Algerian Accords.

There should be an affirmance. The application of the doctrine of forum non conveniens is a matter of discretion to be exercised by the trial court and the Appellate Division. We do not find that those courts abused their discretion as a matter of law under the circumstances presented, even though it appears that there may be no other forum in which plaintiff can obtain the relief it seeks. Nor is reversal required by the provisions of the Algerian Accords.

Ordinarily, nonresidents are permitted to enter New York courts to litigate their disputes as a matter of comity. Obviously, however, our courts are not required to add to their financial and administrative burdens by entertaining litigation which does not have any connection with this State. The common-law doctrine of forum non conveniens, also articulated in CPLR 327, permits a court to stay or dismiss such actions where it is determined that the action, although jurisdictionally sound, would be better adjudicated elsewhere (see, generally, Siegel, NY Prac, § 28; 1 Weinstein-Korn-Miller, NY Civ Prac, par 327.01, pp 3-469 — 3-470). The burden rests upon the defendant challenging the forum to demonstrate relevant private or public interest factors which militate against accepting the litigation (see Piper Aircraft Co. v Reyno, 454 US 235; Bader & Bader v Fort, 66 AD2d 642) and the court, after considering and balancing the various competing factors, must determine in the exercise of its sound discretion whether to retain jurisdiction or not. Among the factors to be considered are the burden on the New York courts, the potential hardship to the defendant, and the unavailability of an alternative forum in which plaintiff may bring suit (Banco Ambrosiano, S.p.A. v Artoc Bank & Trust, 62 NY2d 65; Irrigation & Ind. Dev. Corp. v Indag S.A., 37 NY2d 522, 525; Varkonyi v S. A. Empresa De Viacao Airea Rio Grandense [Varig], 22 NY2d 333, 335). The court may also consider that both parties to the action are nonresidents (Bata v Bata, 304 NY 51) and that the transaction out of which the cause of action arose occurred primarily in a foreign jurisdiction (Silver v Great Amer. Ins. Co., 29 NY2d 356, 361). No one factor is controlling (see Irrigation & Ind. Dev. Corp. v Indag S. A., supra; see, also, Piper Aircraft Co. v Reyno, 454 US 235, supra; Gulf Oil Corp. v Gilbert, 330 US 501, 508). The great advantage of the rule of forum non conveniens is its flexibility based upon the facts and circumstances of each case (Martin v Mieth, 35 NY2d 414, 418; Silver v Great Amer. Ins. Co., supra). The rule rests upon justice, fairness and convenience and we have held that when the court takes these various factors into account in making its decision, there has been no abuse of discretion reviewable by this court (Banco Ambrosiano, S.pA. v Artoc Bank & Trust, supra; Irrigation & Ind. Dev. Corp. v Indag S.A., supra; Varkonyi v Varig, supra, at p 337).

Here, the trial court and the Appellate Division considered all of the relevant factors, including the fact that there may be no alternative forum in which this claim can be tried because of the political situation in Iran under the Khomeini regime. They also noted the substantial financial and administrative burden on the New York courts, the genesis of the claims in Iran, the likely applicability of Iranian law, the nonresidence of both parties and that plaintiff was requesting a sweeping review of the conduct of the Shah’s government during the 38 years of his reign, a review which undoubtedly would require extended trial and pretrial proceedings and which would necessitate the appearance of many foreign witnesses not only to establish liability but also to discover and evaluate defendant’s assets. Indeed, plaintiff’s appendix lists two and one-half pages of single-spaced typewritten entries of property of all kinds throughout the world allegedly owned or controlled by defendant and the royal family through the Pahlavi Foundation. The courts below, after reviewing these factors, concluded that the public interest factors involving the court system and the private interest factors affecting defendant outweighed plaintiff’s claim to litigate this action in the New York courts notwithstanding the unavailability of an alternative forum.

Plaintiff contends that this was error because the availability of an alternative forum is not merely an additional factor for the court to consider but constitutes an absolute precondition to dismissal on conveniens grounds.

The perceived requirement that an alternative forum must be available had its origin in dicta by the United States Supreme Court in Gulf Oil Corp. v Gilbert (330 US 501, 507, supra). Writing for the court, Justice Jackson stated (at pp 506-507): “In all cases in which the doctrine of forum non conveniens comes into play, it presupposes at least two forums in which the defendant is amenable to process; the doctrine furnishes criteria for choice between them.” The Gulf Oil case involved a New York dismissal of a Virginia-based action on the ground that all the relevant contracts were with Virginia. Unlike the present case, there was plainly an alternative forum present in Gulf Oil and the court’s statement was unnecessary to the result. Nevertheless, the dictum has persisted and has been quoted in subsequent cases (see, e.g., Piper Aircraft Co. v Reyno, 454 US 235, supra; Calavo Growers v Belgium, 632 F2d 963, 968) and scholarly treatises (1 Weinstein-Korn-Miller, NY Civ Prac, par 327.02, p 3-479). Indeed, dicta in many of this court’s decisions have also stated it as a general rule (see, e.g., Irrigation & Ind. Dev. Corp. v Indag S.A., 37 NY2d 522, 525, supra; Silver v Great Amer. Ins. Co., 29 NY2d 356, 361, supra; Varkonyi v Varig, 22 NY2d 333, supra).

Without doubt, the availability of another suitable forum is a most important factor to be considered in ruling on a motion to dismiss but we have never held that it was a prerequisite for applying the conveniens doctrine and in Varkonyi we expressly described the availability of an alternative forum as a “pertinent factor”, not as a precondition to dismissal (at p 338). Nor should proof of the availability of another forum be required in all cases before dismissal is permitted. That would place an undue burden on New York courts forcing them to accept foreign-based actions unrelated to this State merely because a more appropriate forum is unwilling or unable to accept jurisdiction (see Korbel, Law of Federal Venue and Choice of Most Convenient Forum, 15 Rutgers L Rev 607, 611, n 28; see, also, Ferguson v Neilson, 58 Hun 604, opn in 33 NY St Rep 814, 11 NYS 524; Noto v Cia Secula di Armanento, 310 F Supp 639). Moreover, even if we were to hold that the motion should be denied if no alternative forum is available, then the burden of demonstrating that fact should fall on plaintiff. Its presence in the New York courts is a matter of choice and permitted because of comity and the public and private burden of its action appearing, it should justify the need for New York to assume jurisdiction (Blair, Doctrine of Forum Non Conveniens in Anglo-American Law, 29 Col L Rev 1, 33-34 [holding that there need not be an alternative forum available before dismissal is warranted]). The result may appear arbitrary to some but forum non conveniens dismissals are not the only instance in which New York courts decline to entertain jurisdiction even though no alternative forum may exist. Typically, the courts also refuse to adjudicate claims otherwise actionable because they involve unclean hands, diplomatic immunity and claims in which the applicable law is penal in nature or is contrary to the public policy of the forum State (see Restatement, Conflict of Laws 2d, § 85, and Comment a; §§ 89, 90; Siegel, Conflicts in a Nutshell, §§ 49-53).

In this case the convenience of the plaintiff is served because it acquired jurisdiction over defendant in New York. That circumstance is entitled to some weight, although less than usual because nonresident parties are involved (see Piper Aircraft Co. v Reyno, 454 US 235, 255-256, supra), but generally, a plaintiff must be able to show more than its own convenience for selecting the forum when the choice imposes a heavy burden on the court and the defendant (Gulf Oil Corp. v Gilbert, supra, at p 508). To that end, plaintiff claims the action should proceed in this jurisdiction because assets of the Shah are located here. Nothing before us establishes that fact, however, and the Surrogate’s Court has apparently found no grounds for ancillary administration of the estate yet (see n 1, infra). The absence of an alternative forum is the only substantial consideration advanced for denial of the motion.

Arrayed against this is the substantial burden upon the courts of this State and the possibility that its judgment may be ineffectual because of its inability to impose a constructive trust on defendant’s assets if they are not in New York. Moreover, defendant probably cannot defend this claim in any realistic way because the witnesses and evidence are located in Iran under plaintiff’s control and are not subject to the mandate of New York’s courts. Indeed, plaintiff’s counsel conceded on oral argument that ideally the action should be maintained in Iran but contended that New York was the better forum. If the action cannot be maintained in Iran, however, under laws which result in judgments cognizable in the United States or other foreign jurisdictions where the Shah’s assets may be found, then that failure must be charged to plaintiff. It is, after all, the government in power, not a hapless national victimized by its country’s policies. Any infirmity in plaintiff’s legal system should weigh against its claim of venue, not impose disadvantage on defendant or the judicial system of this State.

As the dissent states (and as has been noted above), some courts and commentators have taken the view that an action will not be dismissed on forum non conveniens grounds unless a suitable alternative forum is available to plaintiff (see Gulf Oil Corp. v Gilbert, 330 US 501, 508, supra [dictum]; Restatement, Conflict of Laws 2d, § 84, p 251; see, also, Vandam v Smit, 101 NM 508; Hill v Upper Miss. Towing Corp., 252 Minn 165). At the threshold we note that the Supreme Court, while ruling with respect to procedural rights in the Federal courts, has never suggested that the doctrine of forum non conveniens implicates constitutional due process rights. Although the existence of a suitable alternative forum is a most important factor to be considered in applying the forum non conveniens doctrine, its alleged absence does not require the court to retain jurisdiction. Plaintiff has failed to establish that no alternative forum exists and, even if it were assumed that normally an alternative forum is a prerequisite and that plaintiff has none, a forum non conveniens dismissal is still warranted when plaintiff’s chosen forum is unable to afford the parties appropriate relief (Restatement, Conflict of Laws 2d, § 85). Despite the fact that plaintiff’s complaint requests monetary relief, it really seeks a sweeping review of the political and financial management of the Iranian government during the several years of the late Shah’s reign with the object of accounting for and repossessing the nation’s claimed lost wealth wherever it may be located throughout the world. For the reasons stated, that relief cannot properly be afforded by a New York forum with little if any nexus to. the controversy and the taxpayers of this State should not be compelled to assume the heavy financial burden attributable to the cost of administering the litigation contemplated when their interest in the suit and the connection of its subject matter to the State of New York is so ephemeral (Silver v Great Amer. Ins. Co., 29 NY2d 356, 361, supra; Bata v Bata, 304 NY 51, 56, supra; Pietraroia v New Jersey & Hudson Riv. Ry. & Ferry Co., 197 NY 434, 439).

Finally, it should be noted that the Federal cases cited in the dissent rest upon the Federal “change of venue” statute (US Code, tit 28, § 1404, subd [a]) which is substantially different from New York’s CPLR 327 because a successful motion under Federal law results in a transfer of the case to another district within the country. New York’s statute contains no similar provision (Siegel, NY Prac, § 28, p 28).

In sum, the record does not demonstrate a substantial nexus between this State and plaintiff’s cause of the action. That being so the courts below could, in the exercise of their discretion, dismiss the action on grounds of forum non conveniens notwithstanding the fact that the record does not establish an alternative forum where the action may be maintained and they could do so without conditioning their dismissal on defendant’s acceptance of process in another jurisdiction.

The arising from the seizure of American hostages in Iran was settled on January 19,1981 when Iran and the United States executed the General Declaration and the Claims Settlement Declaration, agreements commonly known as the Algerian Accords. These agreements dealt primarily with the unfreezing of Iranian assets located in the United States and the method for resolving suits by nationals of the United States against the government of Iran. They also provided that the United States Government would take certain steps in connection with legal actions involving the Shah’s property. Specifically, the United States agreed to freeze the Shah’s assets within this country, to inform United States courts that in any litigation involving Iran and the Shah’s estate sovereign immunity and the Act of State doctrine were not available as defenses and to guarantee the enforcement of any final judgments involving these matters. Any claimed failure of the United States to meet these treaty obligations was made subject to arbitration between the signatories in a specially designated international tribunal and its award of damages to plaintiff for the breach could be enforced in the courts of any nation. In addition, a summary statement issued by the United States Government prior to the signing of the Accords stated that it would advise American courts of the right of the Iranian government to bring an action in this country to recover the Shah’s assets. Plaintiff contends that these promises preclude New York courts from dismissing the action on forum non conveniens grounds.

At the time the Accords were executed, this action had been instituted in Supreme Court and there was pending a motion to dismiss, made several months earlier, based upon defendant’s contentions that the action involved a nonjusticiable political question, that plaintiff had unclean hands and on grounds of forum non conveni-ens. Indeed, the action was mentioned in an earlier communication of the United States directed to the government of Iran on December 3,1980. Nevertheless, although the Accords when finally concluded contained specific provisions concerning plaintiff’s claims against the Shah and his family, they contained no reference to the pending suit asserting those claims nor did the United States guarantee that a forum would be available to plaintiff to litigate them.

Plaintiff asserts, however, that various statements issued by the State Department when read in conjunction with these treaties evidence a commitment by the United States to assure that New York courts would entertain plaintiff’s claim. It refers particularly to a State Department summary of the United States position on the Iranian situation, which indicated that the Federal Government would “facilitate any legal action” brought by the government of Iran to recover on claims to the former Shah’s assets and request the court’s assistance in obtaining information about such assets (Summary Report, Hostage Crisis in Iran, 1979-1981, submitted by Secretary of State Edmund Muskie in Hearings before the Senate Committee on Foreign Relations, 97th Cong, 1st Sess, Feb. 17, 18 and March 4, 1981, p 14).

Generally, a treaty is to be construed according to principles applied to written contracts between individuals and the clear language of the treaty controls unless it is inconsistent with the intent or expectations of the parties (Sumitomo Shoji Amer. v Avagliano, 457 US 176; Sullivan v Kidd, 254 US 433, 439; Hamilton v Erie R.R. Co., 219 NY 343, 352-353). Permissibly the history of the treaty, diplomatic correspondence and other extraneous documents may be considered to discover that intent (see Sumitomo Shoji Amer. v Avagliano, supra, at p 180; Maximov v United States, 373 US 49, 54; Ross v Pan Amer. Airways, 299 NY 88; and see, generally, Restatement, Foreign Relations Law of United States [rev-Tent Draft No. 1], § 329 et seq.). We have no difficulty interpreting the Accords and the extraneous evidence submitted by the parties to determine that the United States Government did not guarantee plaintiff a New York forum for its claim. Neither the agreements nor the statement of the Summary Report indicates otherwise when analyzed in terms of the natural and ordinary meaning of the words used (see Sullivan v Kidd, supra, at p 439; Hamilton v Erie R.R. Co., 219 NY 343, 352-353, The Federal Government simply expressed a willingness to “facilitate” or aid Iran in bringing the claims, presumably by complying with the limited promises it made in the Accords. Indeed, inasmuch as treaties are subject to constitutional restraints (Reid v Covert, 354 US 1; Restatement, Foreign Relations Law of United States [rev-Tent Draft No. 1], § 304), it is questionable whether the Federal Government could guarantee a New York forum by treaty without violating constitutional principles of federalism and separation of powers (see, generally, Guaranty Trust Co. v United States, 304 US 126, 140 [Statute of Limitations]; see, also, United States v Pink, 315 US 203, 216, 230-234).

The precedents cited by plaintiff are not helpful (Dames & Moore v Regan, 453 US 654; United States v Pink, 315 US 203, supra; United States v Belmont, 301 US 324). Those cases concern the broad powers of the Federal Government to mandate that the resolution of claims against Iran by nationals of the United States shall be pursued in an international tribunal (Dames & Moore v Regan, supra), or to implement the right of the Soviet government (by assignment to the United States) to recapture Russian assets held by Americans or American institutions in this country (United States v Pink, supra; United States v Belmont, supra). Such commitments of the Federal Government to resolve claims between the signatories or nationals are viewed liberally because unless resolved the claims may provide continuing irritations and conflicts which interfere with peaceful relations between the nations. Similar commitments are made in Points I-III of the General Declaration and in the Claims Settlement Declaration of the Accords and are not at issue here. This is litigation by a foreign government against its own national who happened to be within the State of New York at the time this suit was commenced. It involves an internal dispute, not normally a matter considered in the exercise of treaty powers and a matter which does not generally engage the national interest to the same extent as claims by nationals of one signatory nation against the other signatory nation (see Nowak-Rotunda-Young, Constitutional Law [2d ed], p 202).

The parties have culled statements from the various documents and communiques and the testimony of witnesses before the Senate allegedly supporting their respective positions. The evidence suggests, however, that the State Department recognized the problems inherent in this litigation and the restraints of federalism in our system of government and that, as Mr. Warren Christopher, the United States negotiator, stated in his testimony before the Senate, the courts would have to decide whether plaintiff had “a right [to maintain this action] within our legal system” (Senate Committee on Foreign Relations Hearing, 97th Cong, 1st Sess, Feb. 17, 1981, at p 56). The United States agreed that plaintiff would not be foreclosed from pursuing its claim in our courts by preclusive doctrines of international law but it did not undertake to guarantee the opportunity for plaintiff to prove its claim in the New York courts. The United States has met its commitment to “facilitate” this lawsuit by freezing the Shah’s assets and by advising the courts that the Act of State doctrine and sovereign immunity principles are not to apply to plaintiff’s claim. Nothing in the record or in its communication to the trial court suggests that a promise was made that it or the courts would do more.

Accordingly, the order of the Appellate Division should be affirmed, with costs.

Meyer, J.

(dissenting). The majority cites several sections of the Restatement of Conflict of Laws, Second, but rejects section 84, the only section directly in point, cites Piper Aircraft Co. v Reyno (454 US 235) but ignores the effect of its footnote 22, cites CPLR 327 but ignores its language and its legislative history. Its conclusion is, moreover, inconsistent with that of “[t]he majority of jurisdictions * * * that an alternative forum is not merely a factor in analysis, but rather an essential prerequisite to application oí forum non conveniens” (MacLeod v MacLeod, 383 A2d 39, 43, n 3 [Me]; italics in original). Respectfully, therefore, I dissent.

Section 84 of the Restatement is unequivocal. Its statement of forum non conveniens is clear and direct: “A state will not exercise jurisdiction if it is a seriously inconvenient forum for the trial of the action provided that a more appropriate forum is available to the plaintiff” (emphasis supplied). The import of the underscored words is emphasized by its Comment c, which states that: “The two most important factors look to the court’s retention of the case. They are (1) that since it is for the plaintiff to choose the place of suit, his choice of a forum should not be disturbed except for weighty reasons, and (2) that the action will not be dismissed unless a suitable alternative forum is available to the plaintiff. Because of the second factor, the suit will be entertained, no matter how inappropriate the forum may be, if the defendant cannot be subjected to jurisdiction in other states” (emphasis supplied).

That the United States Supreme Court agrees on the essentiality of an alternative forum is clear from its statement of the rule in Gulf Oil Corp. v Gilbert (330 US 501, 507), quoted by the majority. That there existed an alternative forum in that case does not make the presence or absence of such a forum any the less a factor “necessarily involved in the case or essential to its determination” (Black’s Law Dictionary [4th ed], p 541 [“Dictum”]). Rather, the court’s holding was that it was required to consider whether there was an alternative forum before it could balance the other interests involved. Only after having determined that Virginia was an available forum did the Gilbert court proceed to balance the equities. Gilbert would not have been decided differently if the rule now announced by the majority had been applied, but that does not mean that the rule which Gilbert announced was not a holding. Thus, we find the Supreme Court once again carefully considering, as not just a factor, but as one that must be determined “[a]t the outset of any forum non conveniens inquiry * * * whether there exists an alternative forum” (Piper Aircraft Co. v Reyno, 454 US 235, 254, n 22) and concluding that: “Ordinarily, this requirement will be satisfied when the defendant is ‘amenable to process’ in the other jurisdiction. Gilbert, 330 U.S., at 506-507. In rare circumstances, however, where the remedy offered by the other forum is clearly unsatisfactory, the other forum may not be an adequate alternative, and the initial requirement may not be satisfied. Thus, for example, dismissal would not be appropriate where the alternative forum does not permit litigation of the subject matter of the dispute.”

Similarly in MacLeod (383 A2d, at p 43, supra) the Supreme Judicial Court of Maine, after noting that the record did not “display any other facts so much as hinting that the defendant is subject to personal jurisdiction anywhere else in American territory”, held it error to dismiss an action against a nonresident over whom personal jurisdiction had been obtained in Maine except on condition that he, by submitting to the jurisdiction of a court of the State of plaintiff’s residence, assured the existence of a true alternative forum. Even the State’s interest was held subject to the requirement: “From the standpoint of the State of Maine, it is generally undesirable to expend our judicial resources in resolving a dispute between nonresident parties if such is avoidable without depriving the plaintiff of a forum” (italics in original).

A like result necessarily follows from the plain language of CPLR 327, which authorizes stay or dismissal of an action “[w]hen the court finds that in the interest of substantial justice the action should be heard in another forum”. If the majority’s view were correct, the rule would apply when “the action should not be heard in this forum.” The reference to “another forum” presupposes that there is another forum.

Not only the plain language of the section, but also the history of its adoption bears out this conclusion. The section was added to the CPLR in 1972 on the recommendation of the Judicial Conference. Its report states that under the proposed provision jurisdiction may be declined if the court finds “that the forum is seriously inconvenient for the trial of the action and that a more appropriate forum is available” (Seventeenth Ann Report of NY Judicial Conference, 1972, at p A35 [italics supplied]). It notes also that its proposal was based upon Professor Hans Smit’s Report On Whether to Adopt in New York, in Whole or in Part, the Uniform Interstate and International Procedure Act (Thirteenth Ann Report of NY Judicial Conference, 1968, p 130), which repeatedly states as a fundamental that “the action could better be adjudicated in another forum” (p 136, see, also, pp 138, 139).

CPLR 327 reflects the basic approach of the Uniform Interstate and International Procedure Act (IIPA) as to forum non conveniens (Fifteenth Ann Report of NY Judicial Conference, 1970, p A114). It differs, however, in that it inserted the words “on the motion of any party” which the 1970 Report explained in the following paragraph: “This proposal differs somewhat from the IIPA in that it would not permit the court to apply the doctrine of forum non conveniens on its own motion over the objections of all the parties. This reflects the considered view of the Committee that when the court has jurisdiction of an action or proceeding, the convenience of the court alone should not be sufficient to bring this equitable doctrine into operation where all parties prefer to carry on the litigation in this state.” It is, thus, evident that the convenience of the court alone was never intended to have the importance which the majority opinion attributes to it.

The Restatement rule “that a more appropriate forum is available to the plaintiff” comports with the principles of equity and comity, upon which the forum non conveniens doctrine rests. Its “absurd complexity” prior to statutory reform (Braucher, Inconvenient Federal Forum, 60 Harv L Rev 908, 930) resulted from the confusion of various distinct policies under the same title. Thus, as Braucher pointed out (id., at pp 912-914), Blair (29 Col L Rev 1), upon whom the majority relies (majority opn, at p 481), confused principles of jurisdiction and venue, which should result in nondiscretionary dismissal with principles of abuse of process and trial convenience, where dismissal is discretionary, but which result in inconsistent policies. Those factors were untangled by the statutory reform of which CPLR 327 was a part. Earlier proposals made the bounds of jurisdiction depend on the discretionary question of convenience (Act, Recommendation and Study Relating to Service of Process on Foreign Corporations, NY Legis Doc, 1959, No. 65[C], pp 56, 57, 58 [1959 Report of NY Law Rev Comm, pp 69, 124, 125, 126]). The present CPLR, however, makes the bounds of jurisdiction a question of law, depending on the extent of contacts with the State (CPLR 302) and makes forum non conveniens discretionary (CPLR 327) but dependent on the finding that an alternative forum is available. Forum non conveniens is a necessary antidote to the greatly expanded jurisdiction provided by “long-arm” statutes such as CPLR 302 (Homburger and Laufer, Expanding Jurisdiction Over Foreign Torts: 1966 Amendment of New York’s Long-Arm Statute, 16 Buffalo L Rev 67, 73-74). It is, however, a “flexible procedure for the discretionary determination of place of trial” (Brau-cher, 60 Harv L Rev, at p 939, and see id., at pp 931-932), not a technique for leaving unpopular litigants without a court to press their claims.

The majority cites no case, and none has been called to our attention, which holds that dismissal on forum non conveniens grounds is permissible in the absence of an alternative forum. Not only is the Restatement rule recognized in ALR annotations without any indication that any court has ever held otherwise (48 ALR2d 800, 815 [“It has been generally held that the doctrine cannot be applied where the defendant is not subject to suit in the forum which he alleges to be more convenient”]; 9 ALR3d 545, 548 [“the courts in a number of cases have held that jurisdiction of a matrimonial action between nonresident litigants will be assumed or denied depending upon whether the defendant was in fact amenable to and willing to accept the process of the other state”]), but also there are a number of cases which hold that, as a matter of law, the court must retain jurisdiction when no other forum exists to hear the claim (MacLeod v MacLeod, 383 A2d 39 [Me], supra; Wilburn v Wilburn, 192 A2d 797 [DC App]; Rodriguez v Pan Amer. Life Ins. Co., 311 F2d 429, vacated on Act of State grounds 376 US 779; North Branch Prods. v Fisher, 284 F2d 611, cert den 365 US 827; Glicken v Bradford, 204 F Supp 300; Phoenix Canada Oil Co. v Texaco, Inc., 78 FRD 445, cited with approval on this issue in Reyno’s footnote 22 [454 US, at p 254], supra; see Wright, Federal Courts [3d ed], p 186, n 23). In each of those cases the court applied the alternative forum requirement as a precondition to the application of forum non conveniens and in each case put the burden on the defendant to prove the existence of the alternative forum.

The dismissal of the instant action on forum non conve-niens grounds makes it possible for defendant, subject as the courts below have held to the jurisdiction of our courts, to abort that jurisdiction without offering to submit to jurisdiction elsewhere and without any finding that there is an alternative forum. The suggestion of the majority that it is plaintiff’s burden to establish that no alternative forum exists is inconsistent with the authorities cited above. Moreover, its reliance on the appropriate relief exception of section 85 of the Restatement is inconsistent with both Bata v Bata (304 NY 51) and the Restatement itself. In Bata, as in the present case, the action was brought to establish a constructive trust on the basis of a claimed violation of fiduciary duty in a foreign country. We concluded that (304 NY, at p 57): “We realize that this suit may, when it comes to trial, be found to involve property, transactions and laws almost entirely foreign to New York State. Nevertheless, on the record before us, we cannot say that there was no basis at all for retaining jurisdiction here.”

Comment b to section 85 of the Restatement also makes clear its inapplicability:

“A court will be reluctant to dismiss the action if there is no other convenient state in which the plaintiff could obtain more appropriate relief. If no such other state is available, the court will not dismiss unless the plaintiff’s cause of action is contrary to the strong public policy of the forum (see § 90), or unless the court believes that the ends of justice would better be served by giving the plaintiff no relief at all rather than by giving him such relief as it could grant.

* * ⅜

“It will, however, entertain the action if no other forum able to render such relief is open to the plaintiff, and if the court feels that the ends of justice would better be served by giving the plaintiff such relief as it can grant.” All its dramatic stage decoration aside, this case presents the fairly ordinary situation of a defendant who, although a former resident of the plaintiff’s jurisdiction, has no intention of returning. In such a situation, jurisdiction must be retained by the jurisdiction in which the refugee has been properly served.

To paraphrase MacLeod (383 A2d, at p 43): “We would ill serve the interests of justice and comity should we shut the doors of the [New York] Courts to this plaintiff who has in reality no ‘alternative’ forum.” Concluding as I do that the court is wrong in approving dismissal in the absence of the offer by defendant of an alternative forum (and, indeed, even with such an offer, in doing more than staying the instant action), I find it unnecessary to discuss the effect of the Algerian Accords, other than to note that I dissent from its conclusion there also. It is necessary to add, however, in view of the majority’s discussion of public policy, unclean hands and the like as affecting the acceptance by the court of jurisdiction of this case, that, for the reasons stated in the dissent of Justice Fein below, the record here does not permit a dismissal on these alternative bases.

Chief Judge Cooke and Judges Jasen, Jones and Wachtler concur with Judge Simons; Judge Meyer dissents and votes to reverse on the appeal as against Farah Diba Pahlavi in a separate opinion; Judge Kaye taking no part.

On appeal as against defendant Farah Diba Pahlavi: Order affirmed, with costs.

On appeal as against defendant Mohammed Reza Pahlavi: Appeal dismissed, without costs.

      . The Shah died while the motion was pending before Special Term and no party has been substituted to represent him. Accordingly, the appeal should be dismissed (CPLR 1021).

      . Defendant argues that the court lacks personal jurisdiction over her, even though she was served in accordance with applicable State law, because her contacts with this State were insufficient under modern standards of due process (see Shaffer v Heitner, 433 US 186, 203-204). Special Term rejected this argument and defendant has cross-appealed. This court dismissed defendant’s cross appeal on March 22,1984 on the ground that she was not a party aggrieved. (See Cohen and Karger, Powers of the New York Court of Appeals [rev edj, § 91, p 395.)

      . The statute reads as follows: “When the court finds that in the interest of substantial justice the action should be heard in another forum, the court, on the motion of any party, may stay or dismiss the action in whole or in part on any conditions that may be just. The domicile or residence in this state of any party to the action shall not preclude the court from staying or dismissing the action.”