Ukrainian officials urged the D.C. Circuit on Thursday to rehear a decision they say has allowed Russian oil company Tatneft to “weaponize” U.S. courts and conduct a massive foreign intelligence operation through the discovery process.
“Such conduct, by a company whose board includes six Russian government officials, has prompted Ukraine’s U.S. ambassador to warn that Tatneft’s discovery requests appear pretextual and may be the product of a ‘far-reaching interstate agenda,” Ukraine told the court Thursday in a petition for rehearing. According to the petition, Tatneft has so far served discovery on Ukraine and subpoenas on 77 financial institutions.
In late December, a three-judge panel for the D.C. Circuit upheld a district court decision to confirm a $112 million tribunal award to Tatneft over the forced takeover of the largest oil refinery in Ukraine.
Ukraine argued Thursday that the panel “misapprehended” its own precedent late last year when it found there was no adequate forum outside the U.S. for the enforcement proceedings. According to Ukraine’s petition, the panel’s decision contradicts U.S. Supreme Court precedent concerning alternate forum, or forum non conveniens, defenses to the enforcement of arbitration awards.
In its Dec 28 opinion, the panel cited from the D.C. Circuit’s 2021 decision in LLC SPC Stileks v. Republic of Moldova, which held “that forum non conveniens is not available in proceedings to confirm a foreign arbitral award because only U.S. courts can attach foreign commercial assets found within the United States.” According to the Stileks court, this finding was consistent with the D.C. Circuit court’s 2005 opinion in TMR Energy Ltd v. State Prop Fund of Ukraine.
“This court has never adopted any such categorical rule,” Ukraine argued Thursday. “The TMR court specifically declined to address this question, stating that it ‘did not consider TMR’s alternative contention’ that forum non conveniens has no place in an action to enforce an arbitration award.”
According to the petition, the panel’s Dec 28 opinion is also incompatible with the Piper Aircraft Co. v. Reyno, in which the U.S. Supreme Court held that — providing the defendant agrees — an alternate forum is adequate where it “permits litigation of the subject matter.”
Ukraine argued that this issue is “exceptionally important” because the Second Circuit permits forum non conveniens defenses in award confirmation cases. If the decision is allowed to stand, D.C. will become a “clearinghouse for enforcement of foreign arbitral awards,” the petition stated.
Ukraine maintained that Taftnet, which is majority owned by the Russian republic Tatarstan, manufactured the circumstances giving rise to its claim with the intention of using U.S. courts to conduct “sweeping worldwide discovery about the assets and financial transactions of Ukraine and third parties with key roles in strategic Ukrainian industries like defense, energy, transportation and communications.”
“Under the proper construction of TMR, this case would not be here, and a Russian company with close ties to the Russian government would not be able to weaponize the U.S. legal system against Ukraine.”
Last week, Ukraine urged two district courts in New York and Washington, D.C., to issue a protective order that would prevent Tatneft from accessing certain types of information, including that which is classified or otherwise nonpublic.
“Tatneft’s discovery requests have drawn attention and concern at the highest levels of the Ukrainian government,” the country argued in its brief to the D.C. federal court.
Counsel for the parties did not immediately reply to requests for comment Friday.
Tatneft is represented by Jonathan I. Blackman and Nowell D. Bamberger of Cleary Gottlieb Steen & Hamilton LLP, and Lauren K. Handelsman and Sarah Dowd of Binder & Schwartz LLP in the Washington, D.C., case. It is represented by Lauren Kathryn Handelsman of Binder & Schwartz LLP in the New York case.
Ukraine is represented by Maria Kostytska of Winston & Strawn LLP in both cases. It is additionally represented by Thomas M. Buchanan and Kelly A. Librera of Winston & Strawn LLP in the D.C. and New York cases, respectively.
The cases are PAO Tatneft v. Ukraine, case number 1:17-cv-00582, in the U.S. District Court for the District of Columbia, and Ukraine v. PAO Tatneft, case number 1:21-mc-00376, in the U.S. District Court for the Southern District of New York.
–Additional reporting by Caroline Simson. Editing by Michael Watanabe.
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