Successfully Defends Against Enforcement Action of a $20 Million Arbitral Award
On January 26, 2021, Foley Hoag LLP secured a significant victory on behalf of its client Tajik Air, a state-owned corporation of the Republic of Tajikistan, by obtaining the early dismissal of a case seeking to enforce a $20 million foreign arbitral award. In UAB Skyroad Leasing v. OJSC Tajik Air
(No. 20-cv-00763 (APM)), the U.S. District Court for the District of Columbia granted Tajik Air’s motion to dismiss the arbitral award enforcement action because the Court lacked personal jurisdiction over the State-owned entity pursuant to the Due Process Clause of the Fifth Amendment.
Earlier this year, UAB Skyroad Leasing petitioned the Court to enforce a $20 million Lithuanian arbitral award issued in 2018 that stemmed from two lease agreements for Boeing aircrafts. Tajik Air moved to dismiss the enforcement action, arguing that the Court lacked personal jurisdiction because Tajik Air, as a wholly owned corporate instrumentality of a State, is presumed separate from its State owner and, therefore, enjoys the constitutional protections of the Due Process Clause, including the jurisdictional requirement that there be minimum contacts with the United States. Skyroad sought to rebut this presumption, arguing that Tajik Air served as a purported agent of the government.
The Court, in an Opinion by Judge Mehta, found that Skyroad’s evidence fell short and did not demonstrate an unusual degree of control by Tajikistan over Tajik Air. Tajik Air’s authorization to open bank accounts, operate on an independent balance sheet, and acquire and exercise its rights, incur obligations, and litigate, the Court noted, were “the hallmark of separateness from a sovereign.” The Court likewise confirmed that the record revealed no contacts between Tajik Air and the United States to satisfy the Due Process Clause requirement of minimum contacts with the judicial forum, a fact Skyroad conceded.
Arsalan Suleman, counsel in Foley Hoag’s International Litigation and Arbitration Department, welcomed “the Court’s decision recognizing that Tajik Air is entitled to constitutional due process protections under U.S. law, and dismissing the case for lack of personal jurisdiction. The decision affirms this important protection for agencies or instrumentalities of foreign States, including State-owned corporations.” Suleman and Foley Hoag partner Andrew Loewenstein led the team defending Tajik Air, with the assistance of Madeleine Rodriguez, Yuri Parkhomenko and Diana Tsutieva.