Garthon Business Inc., et al., Respondents,v.Kirill Ace Stein, et al., Appellants.BriefN.Y.September 12, 2017To Be Argued By: AARON SIRI Time Requested 30 Mirrutes APL-2016-00097 New York County Clerk's Index No. 653715/14 Olnurt nf J\pp.eals STATE OF NEW YORK ..... GARTHON BUSINESS INC. and CRESTGUARD LIMITED, Plaintiffs-Respondents, -against- KIRILL ACE STEIN and AURDELEY ENTERPRISES LIMITED, Defendants-Appellants. BRIEF FOR DEFENDANT-APPELLANT AURDELEY ENTERPRISES LIMITED November 14, 2016 AARON SIRI MASON BARNEY SIRI & GLIMSTAD LLP 136 Madison Avenue, 5th Floor New York, New York 10016 Telephone: (212) 532-1091 Facsimile: (646) 417-5967 Attorneys for Defendant-Appellant Aurdeley Enterprises Limited CORPORATE DISCLOSURE STATEMENT Pursuant to Rule 500.1(c) of the Rules of Practice of the New York State Court of Appeals, Defendant-Respondent Aurdeley Enterprises Limited hereby discloses that it is wholly owned by Saynal Investment Limited and that it does not have subsidiaries or affiliates. ii TABLE OF CONTENT PRELIMINARY STATEMENT .......................................................................... 1 QUESTIONS PRESENTED ................................................................................. 4 JURISDICTION ..................................................................................................... 5 STATEMENT OF FACTS .................................................................................... 6 A. THE UNDERLYING ACTION ................................................................. 6 1. The Parties ............................................................................................... 6 2. The Agreements ...................................................................................... 6 3. The Choice of Law and Forum Selection Clauses .................................. 8 4. The Relevant Factual Allegations ........................................................... 9 B. THE PARTIES’ HISTORY OF LITIGATION ..................................... 10 C. THE PERTINENT PROCEDURAL HISTORY OF THIS ACTION . 11 1. The Supreme Court’s Order Compelling Arbitration ........................... 11 2. The First Department’s Order Reversing the Supreme Court .............. 12 D. THE RELEVANT CONTEXT OF THIS ACTION .............................. 13 ARGUMENT ........................................................................................................ 15 I. The First Department Improperly Usurped The Role Of The Arbitrator When It Interpreted The Terms Of Agreement 4 And The Termination Agreement ................................................................ 15 II. Even If The First Department Had The Authority To Interpret The Agreements, It Erred By Applying New York Law When The Agreement Called For English Law. ................................................... 21 III. Even If The First Department Should Have Applied New York Law, The Court Misinterpreted The Agreements And Relevant Law Concerning Those Agreements.................................................... 25 iii 1. The Arbitration Clause in Agreement 4 Superseded the Forum Selection Clause in Agreement 1 and, Therefore, All of Plaintiff-Respondents’ Claims Must be Brought in Arbitration .... 26 2. Agreement 4 Replaced Agreements 1 and 2, Therefore, All of Plaintiff-Respondents’ Claims are Subject to the Arbitration Clause in Agreement 4 .................................................................... 29 3. Plaintiff-Respondents Released All Claims That Could Be Brought Under Agreements 1 and 2, and Therefore, Can Only Bring Claims Pursuant to Agreement 4. ......................................... 31 4. The Form of Plaintiff-Respondents’ Pleadings Cannot Negate Agreements 3 and 4’s Express Agreements to Arbitrate with Aurdeley .......................................................................................... 33 CONCLUSION ..................................................................................................... 34 iv TABLE OF AUTHORITIES CASES Brooke Grp. Ltd. v. JCH Syndicate, 488, 87 N.Y.2d 530 (1996) ................................................................................. 32 Citigifts, Inc. v Pechnik, 67 N.Y.2d 774 (1986) ......................................................................................... 30 Columbus Park Corp. v. Dep't of Hous. Pres. & Dev. of City of New York, 80 N.Y.2d 19 (1992) ........................................................................................... 32 Crescendo Mar. Co. v Bank of Communications Co. Ltd., No. 15 Civ. 4481 (JFK), 2016 WL 750351 (S.D.N.Y. Feb. 22, 2016) .............. 24 Finucane v Interior Const. Corp., 264 A.D.2d 618 (1st Dep’t 1999) ....................................................................... 22 Gibson v Seabury Transp. Advisor LLC, 91 A.D.3d 465 (1st Dep’t 2012) ......................................................................... 20 Innospec Ltd. v Ethyl Corp., No. 3:14-CV-158-JAG, 2014 WL 5460413 (E.D. Va. Oct. 27, 2014) .............. 20 Life Receivables Trust v Goshawk Syndicate 102 at Lloyd's, 14 N.Y.3d 850 (2010) ................................................................................... 19, 20 Longo v FlightSafety Intern., Inc., 1 F. Supp. 3d 63 (E.D.N.Y. 2014) ...................................................................... 24 Martinez v Bloomberg LP, 740 F.3d 211 (2d Cir. 2014) ............................................................................... 24 MBC Fin. Services Ltd. v Boston Merchant Fin., Ltd., No. 15-CV-00275 (DAB), 2016 WL 5946709 (S.D.N.Y. Oct. 4, 2016) ......................................... 23 MBC Fin. Services Ltd. v Boston Merchant Fin., Ltd., No. 15-CV-00275 (DAB), 2016 WL 5946709 (S.D.N.Y. Oct. 4, 2016) ........... 25 Ministers and Missionaries Ben. Bd. v Snow, 26 N.Y.3d 466 (2015) ......................................................................................... 22 v Monarch Consulting, Inc. v Natl. Union Fire Ins. Co. of Pittsburgh, PA, 26 N.Y.3d 659 (2016) ......................................................................................... 18 Northville Indus. Corp. v Fort Neck Oil Terminals Corp., 100 A.D.2d 865 (2d Dep’t 1984), affd, 64 N.Y.2d 930 (1985) .......................... 30 Port Auth. of New York and New Jersey v Off. of the Contr. Arbitrator, 241 A.D.2d 353 (1st Dep’t 1997) ....................................................................... 18 Primex Intern. Corp. v Wal-Mart Stores, Inc., 89 N.Y.2d 594 (1997) ............................................................................. 26, 27, 28 Schlaifer v Sedlow, 51 N.Y.2d 181 (1980) ............................................................................. 26, 27, 28 Sisters of St. John the Baptist, Providence Rest Convent v Phillips R. Geraghty Constructor, Inc., 67 N.Y.2d 997 (1986) ........................................... 18 Smith Barney Shearson Inc. v. Sacharow, 91 N.Y.2d 39 (1997) .......................................................................................... 28 State v. Philip Morris Inc., 30 A.D.3d 26 (1st Dep’t 2006) aff'd, 8 N.Y.3d 574 (2007) ............................... 28 Torres v. D'Alesso, 80 A.D.3d 46 (1st Dep’t 2010) ........................................................................... 30 Two Guys from Harrison-N.Y., Inc. v S.F.R. Realty Assoc., 63 N.Y.2d 396 (1984) ......................................................................................... 21 Welsbach Elec. Corp. v MasTec N. Am., Inc., 7 N.Y.3d 624 (2006) ........................................................................................... 22 STATUTES C.P.L.R. 5601 ........................................................................................................... 6 1 PRELIMINARY STATEMENT At its base, this appeal asks the questions: What forum selection clause controls when the parties enter into a succession of agreements that call for different forums, and who gets to decide which clause controls. Defendant- Appellants, Aurdeley Enterprises Limited (“Aurdeley”) and its associate Kirill Ace Stein, provided financial services to Plaintiff-Respondents through a series of interconnected agreements, all of which were signed in 2009. The first two agreements (“Agreement 1” and “Agreement 2”) with Mr. Stein and Aurdeley, respectively, were effective as of January 2009. Later that year, the parties decided to terminate these agreements and substitute them with new agreements that contained substantially similar terms. As such, Aurdeley entered into an agreement with Plaintiff-Respondents’ principal (“Agreement 4”)1 that replaced both Agreements 1 and 2 and terminated Agreement 2; and Mr. Stein entered into a separate agreement (the “Termination Agreement”) with Plaintiff-Respondents to terminate Agreement 1. The forum selection clauses in these agreements differed greatly. Agreement 1 called for application of United States law and for all disputes to be resolved in the United States’ courts. On the other hand, Agreement 4 and the 1 While discussed below, the third agreement, which was entered into at the same time as the Agreement 4, (“Agreement 3”) plays little role in the instant dispute. 2 Termination Agreement were governed by English law and required all disputes to be adjudicated by the London Court of International Arbitration (the “LCIA”) in London. In addition, the arbitration provisions granted the arbitrators the authority to resolve questions of arbitrability. Plaintiff-Respondents initiated this action in New York County Supreme Court in December 2014 alleging that Defendant-Appellants negligently advised them to make certain loans in breach of the above referenced agreements. In response, Defendant-Appellants made a motion to compel arbitration, asserting that both Agreement 4 and the Termination Agreement required all of Plaintiff- Respondents’ claims to be brought in the LCIA. On the heels of a lengthy hearing, the Supreme Court issued a short form order that granted the order to compel arbitration. Plaintiff-Respondents appealed this order. In a split decision, the First Department reversed the Supreme Court. The three-justice majority in the First Department reasoned that the forum selection clause in Agreement 1 in favor of the courts of the United States survived that agreement’s termination, and controlled all of the claims in the Complaint. Defendant-Appellants now appeal the First Department’s order to this Court. The First Department majority’s reasoning was flawed on several levels. First, the majority usurped the role of the arbitrators when it ruled that Plaintiff- Respondents’ claims were not eligible for arbitration. Agreement 4 and the 3 Termination Agreement both granted the arbitrators the authority to rule on questions of arbitrability. The two justices who dissented in the First Department correctly argued that, based on this delegation of authority, only the arbitrators, and not the court, could determine whether the forum selection clause in Agreement 1 was terminated and whether Plaintiff-Respondents’ claims had to be brought in arbitration. Second, even if the courts have the authority to interpret Agreement 4 and the Termination Agreement, the First Department applied the wrong jurisdiction’s law in doing so. Every one of the agreements at issue here, other than Agreement 1, clearly states that it is governed by “the laws of England and Wales.” Nevertheless, the First Department majority ignored this requirement and exclusively applied New York law to all of the agreements. In doing so, the majority misinterpreted the agreements due to differences in the law between New York and the U.K. Third, if the First Department majority was correct to use New York law, its application of that law was incorrect for at least three reasons. When Agreement 4 terminated and amended the earlier agreements, its arbitration clause replaced the forum selection clause in the earlier agreements and was a clear indication that the parties intended their disputes to be arbitrated. Agreement 4 also replaced Agreements 1 and 2 and released the parties from all liability under those earlier 4 agreements. As such, Plaintiff-Respondents can only bring claims against Defendant-Appellants pursuant to Agreement 4, and that agreement’s arbitration clause. For these reasons, as described in more detail below, Defendant-Appellants ask this court to reverse the First Department’s order and affirm the Supreme Court’s order compelling arbitration. QUESTIONS PRESENTED 1. Did the First Department improperly rule on the question of whether the claims at issue in this case are arbitrable where the relevant agreements required “[a]ny dispute arising out of or in connection with this Agreement” to be resolved by arbitration under the London Court of International Arbitration Rules, the agreements expressly incorporated those rules, and those rules reserved for the arbitrators all questions concerning arbitrability? Answer: It is respectfully submitted that this question must be answered in the affirmative and the order of the Supreme Court, dismissing this action in favor of arbitration, affirmed. 2. If the First Department was permitted to rule on the question of arbitrability of the claims at issue in this case, did the First Department improperly apply New York law to interpret the relevant agreements, where those agreements 5 provided that they “shall be governed by, construed and take effect in accordance with the laws of England and Wales[?]” Answer: It is respectfully submitted that this question must be answered in the affirmative and the order of the Supreme Court, dismissing this action in favor of arbitration, affirmed. 3. If the First Department was required to apply New York law when interpreting the relevant agreements, did the First Department err when it held that the later signed agreements did not terminate the forum selection clause in the earlier signed agreement, and when it ruled that that the earlier forum selection clause required all the claims to be heard in New York state court, even though the later signed agreements expressly terminated and replaced the earlier agreement, released the parties from all liability under the earlier agreement and included broad arbitration provisions? Answer: It is respectfully submitted that this question must be answered in the affirmative and the order of the Supreme Court, dismissing this action in favor of arbitration, affirmed. JURISDICTION Pursuant to this Court’s Order, entered on August 25, 2016, together with the Letter to Counsel, dated August 26, 2016, this Court determined that 6 Aurdeley’s appeal as to the issue of arbitrability lies as of right. C.P.L.R. 5601(a) (R. 572-578.) STATEMENT OF FACTS A. THE UNDERLYING ACTION 1. The Parties Plaintiff-Respondent Garthon is a company formed under the laws of the British Virgin Islands, with its headquarters in Tortola in the British Virgin Islands. The other Plaintiff-Respondent, Crestguard, is a company formed under the laws of England and Wales, with its headquarters in Surrey in the United Kingdom. Crestguard is a subsidiary of Garthon, which in turn is 100% owned by Patokh Chodiev. (R. 60-61 at ¶¶ 10-11.) Mr. Chodiev is a Kazak oligarch and billionaire. (R. 371, 442.) Defendant-Appellant Mr. Stein is a U.S. trained attorney and financial consultant who is a U.S. citizen, but has spent many years living abroad. (R. 61 at ¶ 12; R. 368-370.) Defendant-Appellant Aurdeley is a company that was formed under the laws of the British Virgin Islands, with its headquarters in Tortola in the British Virgin Islands. (R. 61 at ¶ 13.) 2. The Agreements This matter concerns a series of related agreements. (R. 75-118.) The first agreement, Agreement 1 (also referred to as the “Quennington Agreement”), was 7 between Quennington Investments Ltd. (a Cyprus based company owned by Mr. Chodiev) and Mr. Stein and was effective from January 1 to July 1, 2009. (R. 62 at ¶ 17; R. 75.) Agreement 2 was between Mr. Chodiev personally and Aurdeley and was effective from January 1 to July 1, 2009. (R. 83.) Both Agreements required Mr. Stein and Aurdeley to provide the “same services” which, as Plaintiff- Respondents allege, included “financial consulting services to [inter alia] Garthon and Crestguard.” (R. 62-64 at ¶¶ 16, 21.) Agreement 3 was between Mr. Chodiev’s daughter and Aurdeley. They executed this third agreement on or about September 30, 2009, but it was effective from July 1, 2009 onward. (R. 91.) On or about September 30, 2009, Aurdeley also executed Agreement 4 with Mr. Chodiev personally. Like Agreement 3, Agreement 4 was effective from July 1, 2009 onward. (R. 102.) But, Agreement 4 amended and replaced Agreements 1 and 2. To that end, after describing those agreements in the recitals, Agreement 4 states that the parties “wish to amend the terms of the engagement of” Aurdeley and Mr. Stein. (R. 65 at ¶ 24.) It also provided in Section 13 that, effective July 1, 2009, Agreement 2 “shall be terminated by the mutual consent of the parties to it” and that neither of the parties “shall have any further liability to [the] other of whatsoever nature pursuant to or in respect of” Agreement 2. (R. 111 at § 13.) On September 30, 2009, Quennington Investments Ltd. and Mr. Stein also entered into a separate termination agreement to terminate Agreement 1 (the 8 “Termination Agreement”). (R. 116.) This Termination Agreement included the same termination language as in Agreement 4, but applied to Agreement 1 (collectively with Section 13 of Agreement 4, the “Termination Provisions”). (Id.) 3. The Choice of Law and Forum Selection Clauses Each of these agreements included a forum selection clause. Agreement 1 stated that it was governed by “the laws of [the] United States of America” (without specifying any particular state) and gave the “courts of the United States of America . . . exclusive jurisdiction to settle any claim, dispute or matter of difference which may arise out of or in connection with this Agreement . . . or the legal relationship established by this Agreement.” (R. 81 at § 12.1.) Agreement 2 included the same forum selection clause but set the courts of England as the exclusive jurisdiction and provided that it was governed by “the laws of England and Wales.” (R. 89 at § 12.1.) In contrast, Agreements 3 and 4 and the Termination Agreement called for arbitration. These latter agreements provide that each “shall be governed by, construed and take effect in accordance with the laws of England and Wales” and that: Any dispute arising out of or in connection with this Agreement…shall be…resolved by arbitration under the London Court of International Arbitration Rules…[in] London, England. 9 (R. 98-99 at § 12; R. 111 at § 12; R. 116.) As a result, only the parties’ first agreement (i.e., Agreement 1) provided for jurisdiction in the U.S. and application of U.S. law. All of the other agreements called for the application of English and Welsh law, and placed the locus of any litigation or arbitration in England. 4. The Relevant Factual Allegations The relevant facts for the underlying action begin when -- prior to and without Defendant-Appellants’ involvement -- Mr. Chodiev made a personal loan to Youssef Hares on March 24, 2009 in the amount of $2 million.2 (R. 66-67 ¶¶ 31- 32.) At the time, one of Mr. Chodiev’s companies, SBS Steel LLP, was involved in a project with Mr. Hares’ company, Hares Engineering GmbH, and the $2 million loan was made in connection with that project. (R. 66 ¶¶ 28-31.) Plaintiff-Respondents allege that Defendant-Appellants involvement began in “the Spring of 2009,” after this March 2009 loan. Plaintiff-Respondents assert that after that initial loan, Defendant-Appellants improperly advised Plaintiff- Respondents to make three additional personal loans to Mr. Hares on: June 7, 2009 ($7 million), December 30, 2009 ($3 million) and August 20, 2010 ($6 million). (R. 67 at ¶¶ 32-33.) Plaintiff-Respondents further allege that, “through 2009 and into 2010,” Defendant-Appellants provided repeated assurances regarding the 2 Unless otherwise identified, the facts in this section are drawn from the Plaintiff-Respondents’ complaint. Nothing herein is intended as an admission of any of the facts alleged in the complaint. 10 propriety of these loans. (Id. at ¶ 34.) Plaintiff-Respondents claim that Defendant- Appellants should never have advised them to make these loans to Mr. Hares personally and that they were subsequently injured when Mr. Hares failed to repay these loans in 2010. (R. 68 at ¶ 36.) B. THE PARTIES’ HISTORY OF LITIGATION After and unrelated to the foregoing events, the relations between the parties broke down. In 2012, Mr. Stein brought an action against Mr. Chodiev and others in the High Court of Justice in London when Mr. Chodiev refused to pay Mr. Stein’s fees for a separate IPO Mr. Stein worked on for Mr. Chodiev. (R. 368.) Ultimately, on April 16, 2014, the London court awarded Mr. Stein a judgment in that action in the amount of $18.4 million, plus interest.3 (R. 315.) Mr. Chodiev then brought an action against Mr. Stein in that same court in October of 2014 with a collateral challenge to Mr. Stein’s judgment. (R. 441.) This new action was based largely on Mr. Chodiev’s claim that Aurdeley was Mr. Stein’s alter ego. (R. 447.) Ultimately in 2015 the London court dismissed Mr. Chodiev’s collateral action. But, while these litigations were ongoing, one of Mr. Chodiev’s companies also brought an action against Aurdeley in Cyprus to obtain evidence to support its collateral challenge to Mr. Stein’s judgment. (R. 551.) 3 With interest, this award totals approximately $30 million that Mr. Chodiev owes to Mr. Stein. 11 C. THE PERTINENT PROCEDURAL HISTORY OF THIS ACTION Without any prior notice or demand, Plaintiff-Respondents filed their complaint in this action in New York County Supreme Court on December 3, 2014, just two months after Mr. Chodiev filed his London action and well before that action was dismissed. (R. 58-74.) In the Complaint they assert claims, inter alia, for breach of contract and breach of fiduciary duty against Mr. Stein and Aurdeley, claiming that they allegedly improperly structured the three loans made to Mr. Hares between June 7, 2009 and August 20, 2010. (R. 59 at ¶ 3.) Just over two weeks later, on or about December 18, 2014, Plaintiff- Respondents issued document requests to both Aurdeley and Mr. Stein. (R. 231- 242, 243-258.) Then on or about December 24, 2014, Plaintiff-Respondents issued a subpoena to a third party associated with Defendant-Appellants, and thereafter sought depositions of the third-party individual and of Aurdeley. (R. 316-17 (summarizing document demands).) Plaintiff-Respondents made all these demands before Defendant-Appellants answered or otherwise responded to the complaint. 1. The Supreme Court’s Order Compelling Arbitration On February 9, 2015, the Defendant-Appellants sought an order to show cause to compel arbitration before the LCIA and for a protective order concerning the voluminous discovery that Plaintiff-Respondents had propounded. (R. 53-54, 12 182-83.) In response, Plaintiff-Respondents moved to compel Defendant- Appellants’ response to their discovery demands. (R. 316-17.) On March 31, 2015 the Supreme Court held a hearing on Defendant-Appellants’ motions. (R. 17-52.) The Supreme Court issued a ruling from the bench compelling arbitration, denying Plaintiff-Respondents’ motion to compel and dismissing the complaint. (R. 49.) The following day, the court issued a written ruling memorializing her oral ruling (the “Supreme Court Arbitration Order”). (R. 14-16.) During oral argument, the Supreme Court made clear that Agreement 4 and the Termination Agreement, by their terms, amended and superseded Agreements 1 and 2. (R. 23-25, 32-33, 41.) As a result, the arbitration clauses in those later agreements must control and the matter must be sent to arbitration before the LCIA. (Id.) The court repeatedly noted that only the first agreement called for application of U.S. law, but that the latter agreements, including Agreement 4 and the Termination Agreement, require the application of English law. (R. 25, 27, 33, 41.) As a result, the court stated that only the arbitrator could decide, pursuant to English law, the scope of the termination in the latter agreements, and whether any liability remains under Agreement 1. (R. 40-41.) 2. The First Department’s Order Reversing the Supreme Court Plaintiff-Respondents filed a notice of appeal from these decisions on April 9, 2015. (R. 10-11.) On April 26, 2016, in a three to two split-decision, the First 13 Department reversed the Supreme Court Arbitration Order (the “Appellate Order”). (R. 579-602.) The crux of the First Department three Justice majority opinion was that the forum selection clause in Agreement 1 in favor of the courts of the United States survived the termination of that agreement by the Termination Agreement. (R. 586-593.) Therefore, the majority held that Agreement 1 granted the court jurisdiction to hear the matter. (R. 586-592.) Conversely, the two Justices in dissent stated that their “disagreement with the majority is . . . that it goes too far.” (R. 601.) The dissenters reasoned that the majority’s decision to interpret the language of the Termination Agreement violated the forum selection clause in that agreement, which reserved such interpretation for the arbitrator. (R. 593-602.) As such, the dissenting justices stated that they would have affirmed the Supreme Court’s order compelling arbitration and denying Plaintiff-Respondents’ motion to compel discovery. On May 2, 2016, Aurdeley and Mr. Stein filed Notices of Appeal to this Court from the Appellate Order. (R. 603, 606.) D. THE RELEVANT CONTEXT OF THIS ACTION In constructing the instant New York action against Mr. Stein and Aurdeley, Plaintiff-Respondents have bent over backwards to keep this case in this state. The reason for their contortions is simple, they signed agreements that call for 14 arbitration, but now seek to take advantage of New York’s broad discovery rules to obtain evidence to further their globe trotting legal attacks against Mr. Stein. The three loans at issue are seven years old, the alleged damages are nearly as old, and there has never been any intervening demand letter or even mention that Aurdeley or Mr. Stein had caused any damages to Plaintiff-Respondents. Yet, Plaintiff-Respondents have filled the docket in the instant New York action with desperate pleas that they must stay in New York and need discovery immediately regarding the relationship between Mr. Stein and Aurdeley4 -- the central issue in, inter alia, the actions commenced in London and Cyprus by Mr. Chodiev. (R. 189-259 (discovery demands); 446-449 (stating in Mr. Chodiev’s Particulars of Claim in his London action that Mr. Stein actually controls Aurdeley).) For example, the over 60 document demands served on Defendant- Appellants shortly after commencement of this action track almost precisely the allegations in the Particulars of Claim filed in the 2014 London proceeding seeking to attack Mr. Stein’s judgment. (Compare R. 231-58 with R. 441-476.) Most telling, there is not even a single document demand related to the three loans to Mr. Hares or the SBS Steel transaction (the transactions at issue in the Complaint). (Compare R. 231-58 with R. 58-74.) 4 As this Court is aware, Plaintiff-Respondents’ attempts to get expedited discovery included asking this Court to void the stay pending appeal that the Supreme Court issued after the Appellate Order. 15 Likewise, instead of simply bringing direct claims against Aurdeley pursuant to Agreements 2, 3 and 4 (to which Aurdeley is a party) the Plaintiff-Respondents claim they are attempting to assert claims against Aurdeley under Agreement 1 (to which Aurdeley is not a party) using legal arguments that require them to prove alter-ego. (R. 60 at ¶ 8.) If Plaintiff-Respondents truly believed they have a legitimate $16 million claim, why would they create an additional hurdle of proving alter ego in order to prevail on their claim if they don’t have to. (Id.) The reason for these legal acrobatics is clearly to avoid arbitration in London and to keep this action in New York. ARGUMENT I. THE FIRST DEPARTMENT IMPROPERLY USURPED THE ROLE OF THE ARBITRATOR WHEN IT INTERPRETED THE TERMS OF AGREEMENT 4 AND THE TERMINATION AGREEMENT The primary dispute between the parties in this appeal is whether the arbitration provisions in Agreement 4 and the Termination Agreement or the forum selection clause in Agreement 1 control the forum for adjudicating Plaintiff- Respondents’ claims. The First Department majority in the Appellate Order ruled that the forum selection clause survived and in fact takes primacy in this action over the later signed agreements’ arbitration clause. However, the Dissenting justices correctly found that in making this determination the First Department majority improperly usurped the role of the arbitrator in interpreting the 16 Termination Provisions. For this reason, the Appellate Order should be reversed and the Supreme Court Arbitration Order affirmed. The First Department majority held that Agreement 4 and the Termination Agreement did not contain “a clear manifestation of the parties’ intent to terminate” the forum selection clause in Agreement 1. (R. 586.) The majority interpreted the later agreements Termination Provisions narrowly as “only serve[ing] to alter the substantive rights of the parties” and not “as having altered the forum selection provisions” in Agreement 1. (Id.) The majority went on to interpret the merger clauses in Agreement 4 and the Termination Agreement as being equally ineffective in altering Agreement 1’s forum selection clause. (R. 589.) Going further, they also interpreted the arbitration provisions in Agreement 4 and the Termination Agreement as being “far narrower” than the forum selection clause in Agreement 1. (R. 592.) Based on these interpretations of the Agreements, the majority found that all of Plaintiff-Respondents’ claims should be heard in the Court – even though several of the claims concern loans made after the parties terminated Agreement 1. (R. 590.) On the other hand, the dissenting justices believed that “[b]efore we reach the parties’ forum dispute, . . . the gateway issue is who gets to decide the issue about the proper forum, or arbitrability.” (R. 599.) They stated that they “neither agree nor disagree with the majority's conclusion that the later agreements at issue 17 did not negate the effectiveness of the forum selection clause in” Agreement 1 rather they merely concluded “that, under established precedent in our Court, the determination of that issue belongs to the arbitrators.” (R. 594.) The dissenters asserted that in order to determine whether the Termination Provisions or merger clause terminated the forum selection clause in Agreement 1, the court had to interpret the meaning of the Termination Provisions in Agreement 4 and the Termination Agreement. But as noted, those agreements granted the arbitrator the exclusive right to interpret their meaning. As such, it is for the arbitrator to decide whether the later agreements terminated Agreement 1’s forum selection clause and thereby decide whether the claim must be arbitrated. Based on this logic, the dissenters correctly concluded: [i]n deciding that the provisions of [Agreement 4 and the Termination Agreement], which contain broad arbitration clauses, do not apply to disputes arising out of the [earlier] Quennington Agreement, [the majority] necessarily interprets the meaning of the provision in those later agreements, which supersede, terminate and release liability under the [earlier] Quennington Agreement, as being prospective only. In doing so, it decides the issue of jurisdiction under the arbitration provisions[.] (R. 601-602.) As noted above, the Supreme Court came to the same conclusion as the dissenting justices. When discussing the scope of the Termination Provisions, the 18 court stated during oral argument that the issue “would be up to the arbitrator.” (R. 40-41.) In making this determination, the dissenters merely applied long-standing black letter law concerning the role of arbitrators. “In disputes subject to arbitration, interpretation of particular contract terms must be left for the arbitrators.” Sisters of St. John the Baptist, Providence Rest Convent v Phillips R. Geraghty Constructor, Inc., 67 N.Y.2d 997, 998 (1986) (applying this principal where “[t]he arbitration clause provided broadly for arbitration of all disputes ‘arising out of, or relating to, the Contract Documents’”); Port Auth. of New York and New Jersey v Off. of the Contr. Arbitrator, 241 A.D.2d 353, 354 (1st Dep’t 1997) (“Since this issue requires for its resolution the interpretation of several substantive provisions of the contract, it should be left to the arbitrator.”). The fact that the arbitrator’s interpretation of the Termination Provisions will affect whether Plaintiff-Respondents’ claims are arbitrable does not alter this conclusion. As the dissenters accurately stated: “Whether a dispute is arbitrable is generally an issue for the court to decide, [but] [t]he general rule, however, does not apply where the parties have clearly and unmistakably provided that this jurisdictional issue is to be decided by an arbitrator.” (R. 599 (citing Monarch Consulting, Inc. v Natl. Union Fire Ins. Co. of Pittsburgh, PA, 26 N.Y.3d 659, 676 (2016) (affirming the principal this principal)).) See also Life Receivables Trust v 19 Goshawk Syndicate 102 at Lloyd's, 14 N.Y.3d 850, 851 (2010) (where there is “clear and unmistakable evidence . . . that the parties agreed to arbitrate questions of arbitrability[,]” issues concerning “the scope and validity of the parties’ arbitration agreement, including issues of arbitrability, are for the arbitration tribunal to determine”). The parties to Agreement 4 and the Termination Agreement clearly and unmistakably assigned questions of interpretation and arbitrability to the arbitrator. The arbitration clauses in Agreement 4 and the Termination Agreement expressly incorporate the LCIA rules. (R. 112 & 116 (the LCIA “Rules are deemed to be incorporated by reference into” this agreement).) Article 23.1 of those rules provides that “[t]he Arbitral Tribunal shall have the power to rule upon its own jurisdiction and authority, including any objection to the initial or continuing existence, validity, effectiveness or scope of the Arbitration Agreement.” (R. 598- 599.)5 New York courts have regularly held the incorporation of a set of 5 The dissenting justices in the First Department cited to the former version of Article 23.1, which was in effect in 2009 when the parties signed the Agreements. (R. 598-599.) However, the preamble to the LCIA rules provides that “any arbitration between them shall be conducted in accordance with the LCIA Rules or such amended rules as the LCIA may have adopted hereafter to take effect before the commencement of the arbitration and that such LCIA Rules form part of their agreement.” (The LCIA Arbitration Rules (2014), available at http://www.lcia.org/dispute_Resolution_Services/lcia-arbitration-rules-2014.aspx#Preamble.) As a result, any arbitration will be conducted under the new version of Article 23.1, which is quoted above. The only relevant difference between the old and new versions of Article 23.1 are that the new version includes the words “authority” and “scope,” which if anything serve to strengthen the argument that the LCIA rules firmly grant the arbitrators the exclusive authority to rule on questions of arbitrability. 20 arbitration rules like this one constitutes “clear and unmistakable evidence.” Gibson v Seabury Transp. Advisor LLC, 91 A.D.3d 465, 465 (1st Dep’t 2012) (finding that an arbitration clause’s reference to the JAMS rules was sufficient to be “clear and unmistakable” evidence); Life Receivables Trust v Goshawk Syndicate 102 at Lloyd's, 66 A.D.3d 495, 496 (1st Dep’t 2009), affd, 14 N.Y.3d 850 (2010) (stating that where an agreement incorporated the AAA rules by reference constituted “clear and unmistakable” evidence); see also Innospec Ltd. v Ethyl Corp., No. 3:14-CV-158-JAG, 2014 WL 5460413, at *3-4 (E.D. Va. Oct. 27, 2014) (holding that incorporation of the LCIA rules “meets the ‘clear and unmistakable’ standard”). The majority in the First Department expressly disagreed with the dissenters’ analysis. According to the majority, because the Termination Provisions failed to adequately terminate the forum selection clause in Agreement 1, both the forum selection clause and arbitration clause continued to exist and there was no “clear and unmistakable” evidence that the parties intended the arbitrator to address questions of arbitrability. There are several flaws in this reasoning. First, the majority’s logic assumes that the Termination Provisions did not terminate the forum selection clause in Agreement 1, but that is the very question that the Termination Agreement leaves for the arbitrator. Second, the majority’s 21 opinion also renders the arbitration clause in the Termination Agreement meaningless. “In construing a contract, one of a court's goals is to avoid an interpretation that would leave contractual clauses meaningless.” Two Guys from Harrison-N.Y., Inc. v S.F.R. Realty Assoc., 63 N.Y.2d 396, 403 (1984). The only substantive provisions in the Termination Agreement concern its termination of Agreement 1 and the release of liability under that agreement. (R. 116.) By ruling that the court and not the arbitrator is the proper forum for reviewing whether Agreement 1 was in fact terminated and to what extent, the majority rendered the arbitration clause meaningless because no other claims could be brought pursuant to the Termination Agreement. Based on the foregoing, because Agreement 4 and the Termination Agreement included mandatory arbitration provisions, the parties’ dispute regarding whether those agreements terminate the forum selection clause in Agreement 1 is reserved for the arbitrator. As a result, this court should apply the dissenting justice’s analysis and reverse the First Department’s decision. II. EVEN IF THE FIRST DEPARTMENT HAD THE AUTHORITY TO INTERPRET THE AGREEMENTS, IT ERRED BY APPLYING NEW YORK LAW WHEN THE AGREEMENT CALLED FOR ENGLISH LAW. Even if the First Department Majority was allowed to take over the arbitrator’s role and interpret the terms of Agreement 4 and the Termination Agreement, which it was not, in doing so it should have applied English Law. 22 Every one of the agreements at issue here, other than Agreement 1, clearly states that it is governed by “the laws of England and Wales.” Nevertheless, the First Department Majority exclusively applied New York law to interpret those agreements. For this reason alone, this Court should reverse the First Department and reinstate the Supreme Court Arbitration Orders. “Generally, courts will enforce a choice-of-law clause so long as the chosen law bears a reasonable relationship to the parties or the transaction.” Welsbach Elec. Corp. v MasTec N. Am., Inc., 7 N.Y.3d 624, 629 (2006); see also Ministers and Missionaries Ben. Bd. v Snow, 26 N.Y.3d 466, 470 (2015), rearg denied, 26 N.Y.3d 1136 (2016) (“We begin with the basic premises that courts will generally enforce choice-of-law clauses[.]” ). The selection of English law here bears more than a reasonable relationship with the parties. Finucane v Interior Const. Corp., 264 A.D.2d 618, 620 (1st Dep’t 1999) (affirming the use of a choice-of-law principal in favor of Oklahoma law because the plaintiff corporation was headquartered there). The only party that Plaintiff-Respondents claim has any connection to New York is Mr. Stein.6 All of the other parties to the agreements and to this action are either based in England (in the case of Crestguard, Mr. 6 Mr. Stein has disputed Plaintiff-Respondents’ claim that he is a New York resident. 23 Chodev and his daughter) or the British Virgin Islands7 (in the case of the other corporations). (R. 44-46.) The First Department Majority’s failure to apply English law significantly impacted its interpretation of the agreements. For example, in disagreeing with the dissenters, the First Department relied on its conclusion that the scope of the arbitration clauses was narrower than the forum selection clause in Agreement 1, thereby granting the court the right to determine arbitrability. They held that: the arbitration clauses, in relation to the forum selection clause contained in [Agreement 1], are far narrower, since . . . they apply to the agreements themselves, whereas the forum selection clause applies to disputes arising not only out of [Agreement 1], but also “the legal relationship established by” the agreement. (R. 593.) However, under well-settled English law this conclusion is inaccurate and both the arbitration clauses and the forum selection clause are equal in scope. In a seminal case called the “Fiona Trust” case (Fili Shipping Co. Ltd. v. Premium Nafta Prods. Ltd., (2007) UKHL 40) the House of Lords8 interpreted the meaning of an arbitration clause that, like the clauses at issue here, called for “[a]ny dispute arising under” the agreement to be resolved through arbitration. Id. 7 The British Virgin Islands relies on English common law. See Virgin Is., The Common Law (Declaration of Application) Act (Cap 13) (“[T]he Common Law of England ... is in force ....”); MBC Fin. Services Ltd. v Boston Merchant Fin., Ltd., No. 15-CV-00275 (DAB), 2016 WL 5946709, at *4 (S.D.N.Y. Oct. 4, 2016) (applying English common law where the contractual choice of law provision called for British Virgin Island law). 8 The House of Lords was the highest court of appeals for civil matters in the United Kingdom and now referred to as the U.K. Supreme Court. 24 (3). There, the Law Lords broke with traditional English common law and held that “courts should presume that an arbitration clause encompasses all disputes involving the relationship into which the contracting parties entered ‘unless the language makes it clear that certain questions were intended to be excluded from the arbitrator's jurisdiction.’” Martinez v Bloomberg LP, 740 F.3d 211, 224-25 (2d Cir. 2014) (quoting from Fiona Trust at (13)) (interpreting the Fiona Trust case). Even though no New York state case has yet addressed the impact of the Fiona Trust case, numerous federal courts in New York have applied the case to forum selection and arbitration clauses where the parties specified English law. In these cases, the courts have concluded that any claim concerning the entire relationship that the contracting parties entered into, should be referred to arbitration. E.g., Id. (holding that a discrimination claim had to be brought in England because the parties employment agreement called for English law and selected the English courts to resolve “any dispute arising hereunder”); Longo v FlightSafety Intern., Inc., 1 F. Supp. 3d 63, 69 (E.D.N.Y. 2014) (finding that harassment claims needed to be brought in English Court per the forum selection clause); Crescendo Mar. Co. v Bank of Communications Co. Ltd., No. 15 Civ. 4481 (JFK), 2016 WL 750351 (S.D.N.Y. Feb. 22, 2016) (holding that, under Fiona Trust, the parties arbitration agreement gave London based arbitrators jurisdiction to hear the petitioner’s fraud claim); MBC Fin. Services Ltd. v Boston Merchant 25 Fin., Ltd., No. 15-CV-00275 (DAB), 2016 WL 5946709, at *5 (S.D.N.Y. Oct. 4, 2016) (stating that, pursuant to Fiona Trust, all of the plaintiff’s claims, including for breach of fiduciary duty, were subject to the contractual forum selection clause because that clause covered the parties entire relationship). Applying the Fiona Trust case to the instant agreements, it is clear that the parties to Agreement 4 and the Termination Agreement did not need to specify that the arbitration clause applied to “the legal relationship established by” the agreement because that was already assumed under English law. Therefore, when interpreted under English law the arbitration clauses in Agreement 4 and the Termination Agreement are of equal scope to the forum selection clause in Agreement 1. As a result, by not applying English law, the First Department arrived at the wrong interpretation of the arbitration clauses. III. EVEN IF THE FIRST DEPARTMENT SHOULD HAVE APPLIED NEW YORK LAW, THE COURT MISINTERPRETED THE AGREEMENTS AND RELEVANT LAW CONCERNING THOSE AGREEMENTS. Even if the First Department should have interpreted Agreement 4 and the Termination Agreement pursuant to New York law, which they should not have done, the First Department majority’s interpretation of those agreements was inconsistent with relevant New York precedent. 26 1. The Arbitration Clause in Agreement 4 Superseded the Forum Selection Clause in Agreement 1 and, Therefore, All of Plaintiff- Respondents’ Claims Must be Brought in Arbitration As noted, the majority in the First Department held that the forum selection clause in Agreement 1 survived that agreement’s termination because neither Agreement 4 nor the Termination Agreement expressly identified and terminated the forum selection clause. (R. 586-588.) According to the majority, absent such an express statement there cannot be “a clear manifestation of [the parties’] intent to terminate the” forum selection clause. (R. 586 (internal quotations omitted).) However, Agreement 4 amended and replaced Agreement 1. As a result, the arbitration provision in Agreement 4 served as the clear manifestation of the parties’ intent to terminate and replace the forum selection clause. The First Department majority’s misapplication of this principal is clear from the cases it chose to support its conclusion. In holding that Agreement 4 failed to expressly negate the forum selection clause in Agreement 1, the majority primarily relied on this Court’s opinion in two cases, Primex Intern. Corp. v Wal- Mart Stores, Inc., 89 N.Y.2d 594 (1997) and Schlaifer v Sedlow, 51 N.Y.2d 181 (1980). The First Department held that these cases stand for the general proposition that a generic merger clause in a later signed agreement does not negate an arbitration provision in an earlier agreement. (R. 587-589.) However, 27 these two cases are factually inapposite to the present matter and as such do not support the majority’s conclusion. As the Supreme Court stated during oral argument, Agreement 4 replaced and superseded Agreements 1 and 2. (R. 23-24.) To that end, Agreement 4’s recitals describe Agreements 1 and 2 and asserts that the parties “wish to amend the terms of the engagement of [Aurdeley] and [Mr. Stein].” (R. 102.) Likewise, it states in its merger clause that it “contains the entire agreement and understanding of the parties and supersedes all prior arrangements, agreements or understandings[.]” (R. 109 at §9.1.) Even Plaintiff-Respondents concede that Agreement 4, which they refer to as a “Related Agreement,” is “properly viewed as an extension of the earlier contracts.” (R. 64.) The fact that Agreement 4 is an amendment to Agreements 1 and 2 sets it apart from the agreements considered in Primex and Schlaifer. Both of those cases concerned multiple agreements where the first contained an arbitration clause, but the later agreements at issue in those cases were unconnected to the earlier agreement and were not intended to amend or modify the terms of the earlier agreement. Primex Intern. Corp., 89 N.Y.2d at 597 (concerning three separate agreements, each one entered into after the expiration of the preceding agreement); Schlaifer, 51 N.Y.2d at 183 (addressing the effects of a later generic release agreement that did not include any reference to the prior agreements). Moreover, 28 unlike here, neither of the later signed agreements in Primex and Schlaifer included a forum selection clause. This distinction is important because the court in Primex and Schlaifer was not addressing what to do when a forum selection clause is replaced, but rather what to do when one agreement contained a forum selection clause but the later agreement did not. As such, Primex and Schlaifer are factually dissimilar to the instant matter and do not provide guidance on how to interpret Agreement 4. Furthermore, “[a]rbitration is strongly favored under New York law. Any doubts as to whether an issue is arbitrable [should] be resolved in favor of arbitration.” State v. Philip Morris Inc., 30 A.D.3d 26, 31 (1st Dep’t 2006) aff’d, 8 N.Y.3d 574 (2007)); see also Smith Barney Shearson Inc. v. Sacharow, 91 N.Y.2d 39, 49-50 (1997) (“long and strong public policy favoring arbitration … Courts should be very hesitant…to impinge upon the rights and obligations derived from commitments to [arbitrate].”). As such, if there was any doubt whether the parties intended to arbitrate these disputes, the majority should have resolved the question in favor of arbitration. Therefore, the First Department incorrectly interpreted the agreement and it should be reversed. 29 2. Agreement 4 Replaced Agreements 1 and 2, Therefore, All of Plaintiff-Respondents’ Claims are Subject to the Arbitration Clause in Agreement 4 The parties’ had two reasons to enter into Agreement 4 and the Termination Agreement: (1) to replace Agreements 1 and 2 with Agreement 4, and (2) to release the parties from all liability pursuant to those earlier Agreements. As such, the only relevant agreement is Agreement 4. Thus, if Plaintiff-Respondents have any claims against Defendant-Appellants they must be brought pursuant to the LCIA arbitration clause in Agreement 4. As discussed supra, Agreement 4 expressly provides that it contains the parties’ entire agreement and supersedes all prior agreements “relating to the subject matter of this Agreement” (R. 109 at § 9.1; R. 23-24.) There is no dispute that the “subject matter” of Agreement 1 and 2 and Agreement 4 are related since all four agreements, in Schedule I, provide for the same exact services by Aurdeley’s associate, Mr. Stein, to Plaintiff-Respondents, including the “negotiation, structuring and execution of any financing transactions.” (R. 82, 113.) The Plaintiff-Respondents themselves allege, all four agreements provide for the “same services.” (R. 64 at ¶ 21.) Hence, Agreement 4 superseded Agreements 1 and 2 because the subject matters of all three Agreements are without question related. In fact, further evidencing that Agreement 4 integrated and superseded Agreements 1 and 2, the total liability under Agreement 4 is expressly limited to 30 the total amount “paid and payable” under Agreements 1, 2, 3, and 4. (R. 108 at § 8.6.) In another case, the First Department explained: Merger clauses are not mere boilerplate. They provide further protection for the interests of certainty and finality. The merger clause in the present case specifies that “[a]ll prior understandings, agreements, representations and warranties, oral or written, between Seller and Purchaser are merged in this contract”… Consequently, any claimed prior…agreement was necessarily extinguished at the moment the written contract became fully executed by both parties. Torres v. D’Alesso, 80 A.D.3d 46, 53 (1st Dep’t 2010) (emphasis in original) see also Citigifts, Inc. v Pechnik, 67 N.Y.2d 774, 775 (1986) (“The Appellate Division properly concluded that there was a novation which extinguished the old agreement and relegated plaintiffs to an action for breach of the new agreement.”); Northville Indus. Corp. v Fort Neck Oil Terminals Corp., 100 A.D.2d 865, 867 (2d Dep’t 1984), affd, 64 N.Y.2d 930 (1985) (“It is well settled that where the parties have clearly expressed or manifested their intention that a subsequent agreement supersede or substitute for an old agreement, the subsequent agreement extinguishes the old one and the remedy for any breach thereof is to sue on the superseding agreement.” (internal quotations omitted)). As a result, because the parties expressly replaced Agreement 1 with Agreement 4, any claim against Defendant-Appellants can only be brought under Agreement 4, and must be sent to arbitration before the LCIA. 31 3. Plaintiff-Respondents Released All Claims That Could Be Brought Under Agreements 1 and 2, and Therefore, Can Only Bring Claims Pursuant to Agreement 4. Agreement 4 not only superseded and integrated Agreements 1 and 2, but in Agreement 4 and the Termination Agreement the Plaintiff-Respondents also released all claims that could be brought under Agreements 1 and 2. Agreement 4 provides neither party “shall have any further liability to [the] other of whatsoever nature pursuant to or in respect of Agreement [2].” (R. 111 § 13.) The Termination Agreement contains the same language applied to Agreement 1. (R. 116.) Hence, Plaintiff-Respondents cannot bring any claims pursuant to Agreements 1 and 2 because the parties released all such claims. Any claim that Aurdeley has any remaining liability related to services provided by its associate, Mr. Stein, from January 1, 2009 to July 1, 2009, can only be brought pursuant to the arbitration clause in Agreement 4. (R. 111 at §§ 12, 13.) To avoid the foregoing outcome, as the dissent highlights, the majority in the First Department interpreted the above referenced releases as only releasing the parties from future liability, but not past liability. (R. 601-602.) Nevertheless, it is respectfully submitted the majority erred because the wording of the release can only logically be read to mean that the parties released each other of all liability from Agreements 1 and 2. 32 As noted, both Agreement 4 and the Termination Agreement contain two clauses in the termination section: (1) that they terminated the prior agreements; and (2) that the parties also release each other of liability. (R. 111 at § 13; R. 116.) The majority’s reading that the second clause only releases future liability would render the first clause meaningless and produce an absurd result since after termination there are no obligations that could give rise to liability. (Id.) Indeed, the termination of these agreements alone had this effect. See, e.g., Brooke Grp. Ltd. v. JCH Syndicate, 488, 87 N.Y.2d 530, 533 (1996) (“when interpreting a contract, the entire contract must be considered so as to give each part meaning”); Columbus Park Corp. v. Dep’t of Hous. Pres. & Dev. of City of New York, 80 N.Y.2d 19, 31 (1992) (“a construction which makes a contract provision meaningless is contrary to basic principles of contract interpretation”). Both the Supreme Court and dissenters in the First Department agreed that the majority’s reading did not comport with the terms’ natural interpretation. In rejecting the same argument from Plaintiff-Respondents, the Supreme Court noted, the interpretation of “any further liability…of whatsoever nature pursuant to or in respect of [the Quennington Agreement]” as only applying to later and not prior liability is a “very strained reading” and in any event “would be up to the arbitrator.” (R. 40.) 33 4. The Form of Plaintiff-Respondents’ Pleadings Cannot Negate Agreements 3 and 4’s Express Agreements to Arbitrate with Aurdeley Plaintiff-Respondents’ believe that by alleging Aurdeley and Mr. Stein are alter egos, they get to ignore the express terms struck with Aurdeley in Agreements 2, 3 and 4, and instead rely on Agreement 1, which Aurdeley is not a party to. Plaintiff-Respondents’ belief is antithetical to the policy of enforcing arbitration clauses, has no basis in law and violates basic contract law. “[C]ourts will not permit a party to elevate form over substance to avoid an otherwise valid arbitration agreement governing the dispute,” including by seeking to avoid arbitration with an entity by suing its agents: The attempt to distinguish officers and directors from the corporation they represent for the purposes of evading an arbitration provision is contrary to the established policy of this State … New York has a “strong public policy of encouraging, by judicial noninterference, an unfettered, voluntary arbitration system, where equity should be done” ... [A]n arbitration clause may be enforced by and against officers and agents of the corporate entity, noting, “If it were otherwise, it would be too easy to circumvent the agreement by naming individuals as Defendant-Appellants instead of the entity Agents themselves.” In short, the courts will not permit a party to elevate form over substance to avoid an otherwise valid arbitration agreement governing the dispute. Hirschfeld Prods., Inc. v. Mirvish, 218 A.D.2d 567, 569 (1st Dep’t 1995) aff’d, 88 N.Y.2d 1054 (1996) (citations omitted and emphasis added.) Plaintiff- Respondents here seek to upend this policy by claiming that by suing Aurdeley’s 34 associate, Mr. Stein, they can avoid the express arbitration clauses with Aurdeley and instead hold Aurdeley to Mr. Stein’s forum selection clause in Agreement 1 by the simple expedient of alleging that Aurdeley is Mr. Stein’s alter ego. This type of manipulation of the form of a claim in order to avoid an arbitration clause should not be tolerated.9 CONCLUSION For the forgoing reasons, Aurdeley respectfully requests that the Court reverse the Appellate Order and reinstate the Supreme Court’s Arbitration Order.10 9 Moreover, the parties struck a plain bargain by which Agreement 1 governed as to Mr. Stein for the period January 1 to July 1, 2009 and Agreement 2 governed as to Aurdeley as for this same period. Indeed, Agreements 1 with Mr. Stein and Agreement 2 with Aurdeley simultaneously cover the same period (January 1 to July 1, 2009) and the “same services” performed by Aurdeley’s associate, Mr. Stein. As such, claims against Aurdeley related to these services would plainly be governed by Agreement 2 -- not Agreement 1 -- including any claim against Aurdeley that it and Mr. Stein are alter egos. (R. 64 at ¶ 21; R 76 at § 2; R. 84 at § 2.) See, e.g., NML Capital v. Republic of Argentina, 17 N.Y.3d 250, 259-60 (2011) (“It is the role of the courts to enforce the agreement made by the parties.”) And unlike Agreement 1, Agreement 2’s forum selection clause (which is otherwise identical to the one contained in Agreement 1) does not designate the United States, but rather London, for any dispute. (R. 89 at § 12.) 10 Aurdeley wholly lacks any minimum contacts with New York required to establish personal jurisdiction under International Shoe Co. Aurdeley reserves all rights and defenses, and nothing herein shall be construed as consent by Aurdeley to the jurisdiction of this Court. Dated: November 14, 2016 SIRI & GLIMST AD LLP dfb Aaron Siri Mason Barney 136 Madison Avenue, Fifth Floor New York, New York 10016 Tel: (212) 532-1091 Attorneys for Aurde/ey Enterprises Limited 35 CERTIFICATION I certify pursuant to 500.13(c)(1) that the total word count for all printed text in the body of the brief, exclusive of the statement of the status of related litigation; the corporate disclosure statement; the table of contents, the table of cases and authorities and the statement of questions presented required by subsection (a) of this section; and any addendum containing material required by subsection 500.1(h) of this Part is 7,871 words. Dated: November 14, 2016 SIRI & GLIMSTAD LLP _ Aaron Siri Mason Barney 136 Madison Avenue, Fifth Floor New York, New York 10016 Tel: (212) 532-1091 Attorneys for Aurdeley Enterprises Limited 36