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Boeing, Energia Achieve Mixed Results in Counterclaims
by Staff Writers
Moscow (RIA Novosti) Dec 26, 2013

An arbitration agreement attached as an exhibit to the creation agreement stipulated: "Any dispute, controversy or claim between two or more of the parties arising out of or relating to this agreement, or the breach, termination, or invalidity thereof, shall be settled by arbitration."

A US federal court on Wednesday granted in part and denied in part a motion by American aerospace and defense conglomerate Boeing to dismiss counterclaims filed by Russian space giant Energia in Boeing's $355 million lawsuit, according to court documents obtained by RAPSI.

In February, plaintiffs The Boeing Company (Boeing) and Boeing Commercial Space Company (BCSC) filed a complaint against Energia and Ukrainian company Yuzhnoye SDO alleging a breach of contract in connection with the 1995 establishment of Sea Launch, a joint venture created to facilitate the sea-based launch of commercial satellites.

Boeing is seeking $355 million plus interest and legal fees.

According to the order, Energia filed an amended counterclaim asserting a breach of fiduciary duty against BCSC, a fraud and intentional deceit claim against both of the Boeing plaintiffs, an accounting claim against both Boeing plaintiffs, and a claim seeking the enforcement of an arbitration award against the Boeing plaintiffs.

The Boeing plaintiffs moved to dismiss the amended counterclaim.

According to the order, the Sea Launch creation agreement stipulated the following: "Any dispute, controversy or claim arising out of or relating to this agreement, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with 'Optional Arbitration Clause for Use in Contracts in USA - Russian Trade and Investment - 1992' ... as modified in Exhibit A to this agreement. The arbitration will be conducted exclusively in English and will be conducted in Stockholm."

An arbitration agreement attached as an exhibit to the creation agreement stipulated: "Any dispute, controversy or claim between two or more of the parties arising out of or relating to this agreement, or the breach, termination, or invalidity thereof, shall be settled by arbitration."

According to the order, Energia claimed that BCSC had waived its rights to arbitrate by filing an arbitrable claim in a US federal court, thus effectively forfeiting its right to enforce the arbitration agreement.

The court held, however, that BCSC's claims against Energia arose not from the creation agreement, but from a separate document that lacked any arbitration clause. In the words of the order: "As such, because RSC Energia has not shown that BCSC's claim against it is arbitrable, it has also not shown that BSBC forfeited its right to force RSC Energia's arbitrable claims into arbitration."

The court held as a result that the fiduciary duty, fraud and intentional deceit and accounting claims as alleged against BCSC should be dismissed owing to the fact that they should be arbitrated.

With regard to the fraud and intentional deceit claim against Boeing, the court held that Energia lacked standing to bring the claim, and thus dismissed it.

The accounting claim against Boeing was dismissed due to the court's conclusion that it is a remedy, not a cause of action.

According to the order, a Swedish arbitrator granted Energia an award against Boeing and BCSC after the arbitrator dismissed their claims against Energia for lack of jurisdiction. The Boeing plaintiffs argued that they have appealed the arbitration award in a Swedish appeals court, and the process is still pending, thus arguing that the award is not yet final and binding. Energia argues that the award was final.

The court cited case law in asserting that "[a]n arbitration award becomes binding when 'no further recourse may be had to another arbitral tribunal (that is, an appeals tribunal)," before concluding that "Boeing and BCSC do not dispute that all arbitral appeals have been exhausted; the award is now being reviewed by a court, not an arbitrator. The award has thus 'become binding.' ... Accordingly, Energia's claim for enforcement of the arbitration award is not subject to dismissal."

The arbitration award claim was found not to be subject to dismissal, and the Boeing plaintiffs' motion to dismiss was thus denied as far as this claim was concerned.

Source: RIA Novosti


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