Opinion
3:16-cv-01631-YY
08-23-2021
CERNER MIDDLE EAST LIMITED, a Cayman Islands Exempted Company, Plaintiff, v. iCAPITAL, LLC, a U.A.E. limited liability company, and AHMED SAEED MAHMOUD AL-BADIE AL-DAHARI, an individual, Defendants.
FINDINGS AND RECOMMENDATIONS
Youlee Yim You United States Magistrate Judge
FINDINGS
Plaintiff Cerner Middle East Limited filed its Verified Complaint (Petition to Recognize Foreign Arbitral Award) against defendants iCapital, LLC and Ahmed Saeed Mahmoud Al-Badie Al-Dahari (“Dhaheri”) for the recognition of a French tribunal's final arbitral award in the amount of $62,689,958.79, inclusive of interest, penalties, costs, and attorney fees. Verified Compl. (“Compl.”) ¶¶ 39, 44, ECF 1-1. Defendants filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), which this court granted. ECF 37. On September 23, 2019, the Ninth Circuit issued an opinion reversing this court's order and remanding the case for further proceedings. See Cerner Middle E. Ltd. v. iCapital, LLC, 939 F.3d 1016 (9th Cir. 2019), ECF 53.
In the caption, defendant's name is spelled “Al-Dahari.” However, it is spelled “Dhaheri” in defendant's briefing. These Findings and Recommendations use the latter spelling.
On remand, plaintiff has filed a motion for summary judgment for recognition of the arbitral award against defendants. Mot. Summ. J. 2 (“Mot.”), ECF 77. For the reasons discussed below, plaintiff's motion for summary judgment should be granted. Plaintiff's pending Motion to Strike Affirmative Defenses (ECF 74) would then be moot.
The court finds this matter suitable for decision without oral argument pursuant to LR 7-1(d).
I. Summary Judgment Standard
Under Federal Rule of Civil Procedure 56(a), “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” The party moving for summary judgment bears the initial responsibility of informing the court of the basis for the motion and identifying portions of the pleadings, depositions, answers to interrogatories, admissions, or affidavits that demonstrate the absence of a triable issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party does so, the nonmoving party must “go beyond the pleadings” and “designate ‘specific facts showing that there is a genuine issue for trial.'” Id. at 324 (citing Fed.Rule.Civ.P. 56(e)).
In determining what facts are material, the court considers the underlying substantive law regarding the claims. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986). Otherwise stated, only disputes over facts that might affect the outcome of the suit preclude the entry of summary judgment. Id. A dispute about a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party. Id. at 248-49. A “scintilla of evidence” or “evidence that is merely colorable or not significantly probative” is insufficient to create a genuine issue of material fact. Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000). The court “does not weigh the evidence or determine the truth of the matter, but only determines whether there is a genuine issue for trial.” Balint v. Carson City, Nev., 180 F.3d 1047, 1054 (9th Cir. 1999). “Reasonable doubts as to the existence of material factual issue are resolved against the moving parties and inferences are drawn in the light most favorable to the non-moving party.” Addisu, 198 F.3d at 1134 (citation omitted).
II. Background
To aid and clarify the analysis below, the court highlights the following undisputed facts:
A more detailed account of the factual and procedural background of this case, including the separate arbitral proceedings in France, is set forth in the Ninth Circuit's opinion and this court's prior order. See Cerner, 939 F.3d at 1020-22; ECF 37, 53.
• In October 2008, plaintiff and iCapital S/E signed the Cerner Business Agreement (“CBA”) regarding the development of medical information software. The CBA required the parties to submit any disputes to binding arbitration under the rules of the International Chamber of Commerce (“ICC”) in Paris, France, and specified that the CBA would be governed by the laws of the state of Missouri. Cerner, 939 F.3d at 1020, ECF 53.
• In September 2012, plaintiff filed a request for arbitration with the ICC, alleging iCapital S/E had failed to make payments under the CBA and had reorganized into iCapital, LLC in violation of the CBA. Id. Following the request for arbitration, Cerner and iCapital, LLC signed a Settlement and Payment Agreement (“SPA”) setting the terms under which iCapital, LCC would pay past and future amounts due. Article 15 of the SPA incorporates the CBA arbitration agreement by reference. Id. at 1021.
• On August 23, 2013, plaintiff filed a second request for arbitration with the ICC against Dhaheri and iCapital, LLC; Dhaheri was not a signatory to the SPA, but plaintiff alleged that Dhaheri was the alter ego of iCapital S/E (which signed the CBA) and iCapital, LLC (which signed the SPA). Id.
• An arbitration hearing took place before a three-member tribunal of the ICC International Court of Arbitration (“ICA Tribunal”) in Paris, France on November 17-18, 2014; plaintiff appeared and presented its case. Neither iCapital, LCC nor Dhaheri made an appearance. Compl. ¶ 37-39, Ex. D, ECF 1-1.
• The ICA Tribunal issued a final arbitral award in favor of plaintiff on July 16, 2015, through a written ruling (the “Award”) and found (as summarized by the Ninth Circuit in Cerner, 939 F.3d at 1021) that: (1) “Dhaheri was personally liable, as sole proprietor, for the obligations of iCapital under the original CBA and had consented to be bound by the [CBA's] arbitration clause”; (2) “Dhaheri was the alter ego of iCapital, which had signed a binding arbitration agreement”; and (3) “iCapital and Dhaheri were liable to [plaintiff] for more than $62 million in damages.” Cerner, 939 F.3d at 1020.
• Thereafter, plaintiff filed this action against Dhaheri and iCapital, LLC in Oregon state court to enforce the Award against property owned by Dhaheri in Oregon. Defendants removed the case to federal court, and this court dismissed plaintiff's case for lack of personal jurisdiction over Dhaheri because “the Tribunal's arbitration award . . . [did] not satisfy the requirement of a decision issued by an arbitral tribunal ‘of competent jurisdiction.'” Order 4, ECF 37.
• While plaintiff's appeal to the Ninth Circuit was pending, the Court of Appeal of Paris (the “Paris Court”) affirmed a French trial court decision that affirmed the ICA Tribunal's Award. The Paris Court specifically noted, “it was rightly that the [ICA Tribunal] declared [that it] had jurisdiction with respect to [Dhaheri].” Id.
• The Ninth Circuit applied the elements of quasi in rem jurisdiction and held that personal jurisdiction over Dhaheri is proper in this court because: (1) plaintiff possesses a valid judgment against Dhaheri, and (2) Dhaheri owns property in Oregon:
In sum, we hold that a court of competent jurisdiction has determined that Dhaheri was properly within the jurisdiction of the arbitration. Because the Arbitration Award is enforceable, Cerner has established both elements of quasi in rem jurisdiction with respect to Dhaheri: Cerner possesses a valid judgment against Dhaheri, and Dhaheri owns property that is located in Oregon. Based on the Paris Court decision issued subsequent to the district court's order, we reverse the district court's order dismissing this case for lack of personal jurisdiction and remand for further proceedings.Cerner, 939 F.3d at 1028-29.
Dhaheri does not dispute that he owns a bank account in Oregon. See ECF 37, n.3.
III. Discussion
Following the Ninth Circuit's decision that the “Arbitration Award is enforceable, ” plaintiff moves the court for an order granting summary judgment on its claim for recognition of the Award. Mot., ECF 77. Defendants argue that plaintiff's motion for summary judgment should be denied because: (1) the court lacks personal jurisdiction over iCapital, LCC, (2) defendants did not receive proper notice of the arbitral proceedings, and (3) enforcement would be contrary to public policy. Resp. 5-6, ECF 80. Each of these arguments is addressed in turn.
A. Personal jurisdiction over iCapital, LLC is proper.
“Confirmation of foreign arbitration awards is governed by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards . . . known as the New York Convention.” Ministry of Def. & Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Def. Sys., Inc., 665 F.3d 1091, 1095 (9th Cir. 2011); see Convention Done at New York June 10, 1958; T.I.A.S. No. 6997 (Dec. 29, 1970). Congress implemented the New York Convention through Article II of the Federal Arbitration Act (“FAA”). See 9 U.S.C. §§ 201-208.
The parties agree that plaintiff's claim for recognition of the Award is governed by the Convention. The Convention does not address personal jurisdiction in actions to enforce a foreign arbitral award, but the Ninth Circuit has held that “due process requires that the district court have jurisdiction over the defendant against whom enforcement is sought or his property.” Glencore Grain, 284 F.3d. at 1122. In addition, “[i]t is the plaintiff's burden to establish the court's personal jurisdiction over a defendant.” Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001) (citation omitted).
The Convention does address subject matter jurisdiction and states, “‘[t]he district courts of the United States . . . have original jurisdiction over such an action or proceeding [falling under the Convention].'” See Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1120 (9th Cir. 2002) (quoting 9 U.S.C. § 202-03).
Where, as here, a party seeks to enforce an arbitral award against a defendant's property in a given forum, that property may form the basis for jurisdiction over a defendant “even if that property has no relationship to the underlying controversy between the parties.” Glencore Grain, 284 F.3d at 1127 . As the Ninth Circuit explained, this particular “strain of jurisdiction”-where “the plaintiff seeks to apply what he concedes to be the property of the defendant to the satisfaction of a claim against him”-is known as, “quasi in rem type II” jurisdiction. Id. At 1127 n.8 (internal quotation marks and citations omitted). As the Ninth Circuit further explained, quasi in rem jurisdiction requires a plaintiff to show that (1) a court of competent jurisdiction has rendered a judgment against each defendant, and (2) each defendant has property in the forum. See Cerner, 939 F.3d at 1022 (citing Office Depot Inc. v. Zuccarini, 596 F.3d 696, 700 (9th Cir. 2010)).
Here, as this court previously noted, “[i]t is undisputed that the only possible avenue for [the court] to assert jurisdiction over defendants is through type two quasi in rem jurisdiction over Mr. Dhaheri.” Order, ECF 37. In addition, defendants acknowledge that “the Ninth Circuit held the court has personal jurisdiction over [Dhaheri] . . . [and] expressly based its ruling on quasi in rem jurisdiction.” Resp. 5, ECF 80. Further, this court previously found that “the parties agree that if this Court has jurisdiction over Mr. Dhaheri and concludes that he is an alter ego of iCapital, LLC, then the Court also has jurisdiction over iCapital, LLC.” Order 3 n.2, ECF 37. Finally, there is no question that the Paris Court affirmed the ICA Tribunal's ruling that Dhaheri is the alter ego of iCapital, LCC and, further, that the Ninth Circuit recognized the Paris Court's decision under principles of international comity. See Cerner, 939 F.3d at 1028 . Despite this, defendants now argue on remand that “the Ninth Circuit expressly did not find the court had personal jurisdiction over iCapital, LCC under an ‘alter ego' theory.” Resp. 6, ECF 80. In making this argument, defendants seem to imply that that alter ego liability only runs in one direction. Defendants are mistaken.
In Ranza v. Nike, 793 F.3d 1059 (2015), the Ninth Circuit addressed the application of the alter ego test “in reverse, ” id. at 1072, for purpose of establishing personal jurisdiction over a defendant, and held that “the alter ego test may be used to extend personal jurisdiction to a foreign parent or subsidiary when, in actuality, the foreign entity is not really separate from its domestic affiliate.” Id. at 1073 (emphasis in original). Although Ranza “involved in personam rather than quasi in rem jurisdiction, its reasoning remains applicable.” Bunge S.A. v. Pac. Gulf Shipping (Singapore) Pte. Ltd., No. 3:19-CV-00491-SB, 2020 WL 1528250, at *2 (D. Or. Mar. 31, 2020) (citation omitted). As the Ninth Circuit explained, “[w]hen two organizations assume alter ego status, they effectively operate as a single, unified entity notwithstanding the superficial corporate boundaries between them. The consolidated entity is subject to jurisdiction in any forum where it operates regardless of which formal corporation maintains an in-forum presence.” Ranza, 793 F.3d at 1072 (citation omitted).
Here, iCapital, LCC is “not really separate” from Dhaheri. Ranza, 793 F.3d at 1072. As such, iCapital, LCC should be no less subject to the court's jurisdiction than Dhaheri. See id.
Defendants insist that the Paris Court's affirmance of the ICA Tribunal's Award “is not preclusive” and should not stop the court from reanalyzing the alter ego issue. Resp. 6, ECF 80. Defendants, however, overlook principles of res judicata and the fact that “a valid and final award by arbitration has the same effects under the rules of res judicata . . . as a judgment of a court.” Restatement (Second) of Judgments § 84 (1982). This maxim is well-illustrated in C.D. Anderson & Co., Inc. v. Lemos, 832 F.2d 1097 (9th Cir. 1987).
In Lemos, the plaintiff brought a claim for payment of an alleged debt in federal court after an arbitration panel considered and denied the same claim. Id. at 1099. The Ninth Circuit, however, found that both actions “arose out of the same transactional nucleus of facts, ” and explained that res judicata “bars all grounds for recovery which could have been asserted . . . in a prior suit between the same parties . . . on the same cause of action.” Id. at 1100 (internal quotation marks and citations omitted). Because the parties “actually submitted their controversy to arbitration and secured an award, ” and there was no basis for disregarding the award, the court held that the plaintiff “waived any right it had to litigate those claims in federal court.” Id. at 1099; see Galilea, LLC v. Pantaenius Am. Ltd. No. CV18131BLGSPWTJC, 2021 WL 2250862, at *3 (D. Mont. Apr. 14, 2021), report and recommendation adopted, No. CV 18-131-BLG-SPW, 2021 WL 2206968 (D. Mont. June 1, 2021) (finding that the plaintiffs' claims had been addressed in a prior arbitration; emphasizing that the arbitral proceedings afforded “basic elements of adjudicatory procedure”-including multiple days of hearings, the presentation of evidence and testimony, and post-hearing briefs; and finding plaintiff's claims “therefore barred by the doctrine of res judicata”).
Here, in a similar vein, the alter ego issue “[has] already been raised and thoroughly addressed by and through the arbitration proceeding.” Galilea, 2021 WL 2250862, at *8. Indeed, the Ninth Circuit in Cerner closely scrutinized the final Award and found that the ICA Tribunal: (1) applied Missouri state law in accordance with the choice of law clause in the CBA; (2) conducted an extensive analysis of the alter ego issues presented by the parties in this case; and (3) determined that Dhaheri, a non-signatory to both the CBA and SPA, was nonetheless “bound by the arbitration clauses in . . . [those contracts] as iCapital, LLC's alter ego.” 939 F.3d at 1025-1026. In addition, the Ninth Circuit pointed out that the Paris Court, on defendants' appeal of the Award, cited the Tribunal's alter ego analysis in its affirmance of the Award and “expressly discussed the question of whether the Tribunal had jurisdiction over Dhaheri.” Id. at 1026. Significantly, the Ninth Circuit even conducted its own alter ego analysis and, like the ICA Tribunal, had no trouble finding that Dhaheri “held 99% of iCapital shares, ” was the “sole financial and operational decision-maker for iCapital, ” and “used the corporate form to violate his own obligations under the CBA and SPA”-all of which satisfied the three-part test for alter ego liability under Missouri law. Id. at 1027 (internal quotation marks omitted).
Viewing this robust record in the light most favorable to defendants, it is clear that defendants' alter ego arguments have been given due consideration by multiple courts and principles of res judicata prevent defendants from relitigating them here. The court finds, therefore, that the necessary bases for asserting quasi in rem jurisdiction over iCapital, LCC are well in place: (1) the Paris Court entered a judgment against iCapital, LCC, and (2) iCapital, LCC owns property in Oregon because Dhaheri owns property in Oregon and he is the alter ego of iCapital, LCC. See Office Depot, 596 F.3d at 700 (discussing the elements of quasi in rem jurisdiction). Thus, iCapital, LCC is properly before this court and defendants' personal jurisdiction argument cannot bar plaintiff's motion for summary judgment for an order confirming the Award.
B. There are no grounds to deny recognition of the Award.
As noted, the parties agree that confirmation of foreign arbitration awards is governed by the Convention. Under the Convention, any party to an arbitration may, “within three years after an arbitral award falling under the Convention is made . . . apply to any court having jurisdiction . . . for an order confirming the award as against any other party to the arbitration.” 9 U.S.C. § 207. Under Article IV of the Convention, “[a] petitioner seeking the confirmation of a foreign arbitral award satisfies its burden by submitting copies of (1) the award and (2) the agreement to arbitrate.” Pacer Constr. Holdings Corp. v. Pelletier, No. 19CV1263-MMA (BGS), 2020 WL 977871, at *3 (S.D. Cal. Feb. 28, 2020) (citation omitted); see 21 U.S.T. 2517. The Convention gives the court little discretion when considering such a petition and states: “The court shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention.” 9 U.S.C. § 207 (emphasis added). Further, “the party opposing enforcement of an arbitral award has the burden to prove that one of the defenses . . . applies.” Zeiler v. Deitsch, 500 F.3d 157, 164 (2d Cir. 2007) (citation omitted). That burden “is substantial because the public policy in favor of international arbitration is strong[.]” Polimaster, Ltd. v. RAE Systems, Inc., 623 F.3d 832, 836 (9th Cir. 2010).
The grounds for denying recognition of a foreign arbitration award under the New York Convention are set forth in Article V, 21 U.S.T. 2517. See 9 U.S.C. § 207. Under Article V:
1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:
(a) The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or
(b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or
(c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or
(d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
(e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:
(a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or
(b) The recognition or enforcement of the award would be contrary to the public policy of that country.
Here, to start, it is clear that plaintiff has met its burden under Article IV of the Convention because it “duly submitted” the documents required for confirmation of an arbitral award: (a) the Award (i.e., the ICA Tribunal's written opinion of July 16, 2015, see Compl. Ex. D, ECF 1-1), and (b) the parties' agreement to arbitrate as contained in the CBA (see id., Ex. A) and as incorporated into the SPA (see id., Ex. B). Mot. 13, ECF 77. Thus, the only question is whether defendants have a viable defense to enforcement under the Convention. They do not.
1.Defendants were notified of the arbitral proceedings.
Defendants claim that “they were never served or notified of the Arbitration Hearing, ” and argue that this constitutes a basis for refusing recognition of the Award under Article V, Section (1)(b) of the Convention. Resp. 8, ECF 80. Under Section (1)(b), a court may refuse recognition of an award if the party “furnishes … proof” that “[t]he party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case.” 21 U.S.T. 2517; see 9 U.S.C. § 207. Despite defendants' protests, however, the ICA Tribunal Award and the ruling of the Paris Court of Appeal leave no doubt that both defendants were, in fact, notified, and defendants offer no relevant or persuasive reasons for the court to disregard those rulings or to doubt the veracity of the factual findings therein.
In simple terms, it is completely clear from the ICA Tribunal's lengthy (114-page) Award ruling and the Paris Court's affirmance of the Award that the ICA Tribunal notified both iCapital, LCC and Dhaheri of plaintiff's request for arbitration in August 2013 and subsequently communicated with both defendants about the arbitration proceedings that were eventually held in November 2014 in Paris. See Compl. Ex. D, ECF 1-1; Garfield Decl. Ex. A, ECF 78. The records also make it clear that, despite being aware of the proceedings, both defendants simply chose not to appear. Id.
Starting in Section 1.2, the Award includes detailed information about the manner in which the ICA Tribunal communicated with iCapital, LCC and Dhaheri before and after the hearing, and the Award contains all known contact information for the parties-physical addresses, mailing addresses, fax numbers, telephone numbers, and email addresses. Compl. Ex. D, ECF 1-1. Section 1.2.1, entitled, “Notification and Communication, ” indicates the ICA Tribunal communicated with Dhaheri via courier and fax through February 13, 2014, and thereafter, sent correspondence via fax only. Id. Section 1.2.4 specifically notes, “[f]or the avoidance of doubt, in its correspondence of 4th October 2013, the Secretariate explicitly confirmed that the Request for Arbitration had been received by [Dhaheri], ” and also states, “the Transmission reports from the fax machine served as a form of proof that the faxes were being delivered” to Dhaheri. Id. The next section also contains specific information about correspondence between the Tribunal and defendants and provides in relevant part (with the defendants' respective names replacing the Tribunal's references for ease of reading) as follows:
2.1.4 Pursuant to Article 4(5) of the Rules, on 30th August 2013, the Secretariat transmitted to both [defendants] a copy of the Request for Arbitration and the documents annexed thereto, sent to the business address of [iCapital, LLC], . . . [and] requested an Answer . . . within the stipulated time limit of 30 days.
2.1.5 On 30th September 2013, counsel for [iCapital, LLC] acknowledged receipt of the Secretariat's letter of 30th August 2013 . . .
2.1.6 [I]n response to [iCapital, LLC's] insistence that [Dhaheri] could not be contacted through it . . . the Secretariat included the relevant delivery receipt that indicated that [Dhaheri] had in fact received the Request for Arbitration at [iCapital, LLC's] address . . .
2.2.1 [O]n 29th January 2014, [iCapital, LLC and Dhaheri] were informed of the Tribunal's intention to hold a . . . Hearing during . . . 2014 and were requested to confirm their availability to attend such a hearing . . .
2.2.2 In response to the Tribunal's letter . . . [iCapital, LLC] wrote to the Tribunal on 30th January 2014 setting out . . . ‘objection to jurisdiction' . . .
2.2.6 On 11th February 2014, the Legal Representatives for [iCapital, LLC] informed the Tribunal . . . ‘[iCapital, LLC] will not attend in Paris on either of the proposed dates [in] . . . 2014.'Id.
Significantly, defendants do not point to any erroneous facts or unreliable information in the quoted sections above. Moreover, defendants never argue that either iCapital, LCC or Dhaheri were unaware of the proceedings. Further, and most notably, iCapital, LLC does not specifically contest that its legal representative, in fact, received and sent correspondence in the manner described above, nor does Dhaheri directly dispute that he, in fact, received correspondence from the ICA Tribunal via fax and courier in August 2013 and January 2014 as the Award describes.
Instead, defendants shift their long-standing complaints about lack of notice to an argument that the form of notice was defective, and in support of their claim, submit a declaration from Dhaheri and two letters from the UAE Ministry of Justice dated July 2020 that were apparently generated at the request of defendants. See Resp. 9, ECF 80; Dhaheri Decl. Exs. C and D, ECF 82-3, 82-4. The identical letters from the UAE Ministry of Justice, however, say nothing about the ICA Tribunal's notices to the defendants detailed above and therefore give no reason to question the ICA Tribunal's ruling. The letters from the Ministry of Justice simply state as follows (including all spellings in the original, translated document):
We would like to inform you that the Centeral Authority at the Justice Ministry, Department of International Relations didn't receive an Judicial documents pertaining to the notification of [either Dhaheri or iCapital, LLC] regarding No. 19683 AJFZF which is being heared infront of the international court of Arbitration which comes under the International Chamber of Commerce in the Republic of France - to enable us to notify the concerned with Judicial documents.Id. That statement on its face, however, does not bolster defendants' arguments because notification to the UAE Ministry of Justice is not at issue here, and that body's ability to notify defendants of arbitral proceedings in France is equally irrelevant. While the documents suggest that the parties were subject to the “Agreement on Judicial Cooperation, recognition of judgments and enforcements thereof between the United Arab Emirates and the Government of the Republic of France, ” no corroborating evidence of this has been presented, and, as plaintiff points out, the Convention-which the parties do agree controls this dispute-“does not require parties to be notified through a central authority.” Reply. 8, ECF 83.
Furthermore, defendants did not complain about lack of notice to iCapital, LCC in their appeal of the Award to the Paris Court and only argued that, because Dhaheri “received neither the request for arbitration nor accompanying documents, ” the Award should be annulled. Garfield Decl. Ex. A., ECF 78. The Paris Court, in turn, first cited the provisions of the ICC Rules of Arbitration regarding the sanctioned and agreed-upon methods of communication, and then reviewed the ICA Tribunal's Award for compliance. See Id. In its analysis, the Paris Court cited the same sections of the Award quoted above and referred to this evidence as “attesting that [Dhaheri] had indeed received the request [for arbitration] that was sent[.]” Id. The Paris Court further noted that Dhaheri did not dispute the accuracy of the mailing addresses or email addresses used by the ICA Tribunal, and the court ultimately concluded, “it is thus sufficiently evidenced that the principle of audi alteram partem, i.e., the principle of both sides being heard fairly, was complied with in the proceedings to which [Dhaheri] chose not to appear.” Id.
Finally, the fact that the Ninth Circuit's ruling in Cerner recognized the Paris Court's ruling on the basis of international comity further leaves no grounds for finding that there are any genuine issues of material fact on the topic of notice. See 939 F.3d 1028. Therefore, because no reasonable juror could find that either Dhaheri or iCapital, LCC did not receive proper notice of the arbitral proceedings, defendants have not met their burden to show that the Award should not be enforced under the notice defense in Article V, Section (1)(b) of the Convention.
2.Recognition of the Award does not violate public policy.
Defendants' final argument is equally unavailing. Defendants invoke the public policy defense in Article V, Section (2)(b) of the Convention and contend that recognition of the Award would “be contrary to public policy” because it is inconsistent with a “conflicting judgment from the UAE” (dubbed by defendants, the “UAE Judgment”). Resp. 9, ECF 80. The Ninth Circuit stated that this defense is to be “narrowly construed” in recognition of “a presumption favoring upholding international arbitration awards under the Convention.” Cubic Def. Sys., 665 F.3d at 1097. Further, the court noted, this public policy defense “applies only when confirmation . . . ‘would violate the forum state's most basic notions of morality and justice, '” and “‘has rarely been successful.'” Id. (citations omitted).
The UAE Judgment, however, cannot block recognition of the Award because defendants have not shown how the judgment conflicts with the Award. While the UAE court apparently found iCapital liable and declined to find Dhaheri liable, that ruling adjudicated liability, as plaintiff correctly pointed out, for “a dishonored check.” Reply. 8, ECF 83. Regarding the questions of individual liability, the UAE Judgment stated, “the courts have ruled that a company, regardless of its type . . . has its own corporate identity and financial obligations that are separate from those of the partners therein[, ]” and noted, “the partners' obligations are separate from those of [iCapital]” Dhaheri Decl. Ex. B, ECF 82-2. Dhaheri was therefore dismissed from the case. Id.
While defendants insist that this UAE Judgment means that Dhaheri “cannot be held personally liable for any of iCapital's obligations, ” Resp. 9, ECF 80, they overlook the substantive differences between a UAE court adjudicating Dhaheri's liability for a bad check under UAE law and summarily concluding nonliability, on the one hand, and a duly empaneled arbitration body adjudicating Dhaheri's liability under Missouri law-as the choice of law agreed upon by the parties in the CBA-and concluding that Dhaheri is liable as the alter ego of iCapital, LLC, on the other. See Cerner, 939 F.3d at 1020 (noting that the parties specified in the CBA that their contract would be “‘governed by, construed, interpreted and enforced in accordance with the laws of the State of Missouri'”). It is, of course, possible that UAE laws on corporate and individual liability are compatible with the laws of Missouri; however, it is nevertheless clear, from the court's review of the UAE Judgment, that the UAE Judgement did not apply the laws of Missouri and did not undertake any kind of alter ego analysis that could be found in conflict with the Award. See Dhaheri Decl. 3 Ex. B, ECF 82-2.
It is also impossible to accord any weight to the UAE Judgment on the issue of Dhaheri's individual liability because a more recent UAE judgment, issued on October 18, 2020, explicitly acknowledged the ICA Tribunal Award and rejected a petition submitted by Dhaheri seeking a court order “discharging him . . . from both sureties [with Cerner]” on the grounds that “the personality of the guarantor company [iCapital, LLC] is independent from the plaintiff's [Dhaheri] personality.” Garfield Decl. Ex. B, ECF 85-2. In other words, Dhaheri asserted an alter ego argument before a UAE Court as protection from the Award that found him and iCapital, LLC jointly and severally liable. See Id. In denying Dhaheri's “lawsuit pleading for confirmation of his quittance in his personal capacity, ” the UAE court pointed to the Award and its preclusive effects and stated (with the spellings and syntax from the provided translation):
It is substantiated in the judgment rendered in the arbitration lawsuit . . . before the International Arbitration Court of the International Chamber of Commerce in Paris, France that it has compelled the plaintiff [Dhaheri] in his person jointly with . . . [iCapital, LLC] to pay financial amounts to the defendant [Cerner] for ‘Cerner Commercial Agreement' [CBA] and whereas the aforesaid arbitration award is binding on the parties thereto and has the Res judicata [effect] while the said judgment has proved the responsibility of the plaintiff for the guaranteed agreement under both contracts[.]Id. (italics in original). The court therefore dismissed Dhaheri's lawsuit. Id. If there were any question about a supposed conflict between the Award and the UAE Judgment, this October 2020 ruling eliminates it. See id.
Thus, defendants have not met their “substantial burden” to prove that enforcement of the Award would violate public policy. Even viewing defendants' evidence and arguments in the light most favorable to them, there is no genuine issue as to the existence of any public policy grounds on which the court could refuse recognition of the Award under Article V, Section (2)(b) of the Convention.
RECOMMENDATIONS
It is therefore recommended that plaintiff's motion for summary judgment (ECF 77) be GRANTED, and that an order be issued recognizing the Award and that judgment be entered against defendants' property in an amount not to exceed the total amount due in the Award. Plaintiff's motion to strike (ECF 74) should be denied as moot.
SCHEDULING ORDER
These Findings and Recommendations will be referred to a district judge. Objections, if any, are due Tuesday, September 07, 2021. If no objections are filed, then the Findings and Recommendations will go under advisement on that date.
If objections are filed, then a response is due within 14 days after being served with a copy of the objections. When the response is due or filed, whichever date is earlier, the Findings and Recommendations will go under advisement.
NOTICE
These Findings and Recommendations are not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any Notice of Appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of a judgment.