Tag Archives | Dubai

Case of the Day: Injazat Technology Fund v. Najafi

By on May 8, 2012 in Arbitration

The case of the day is Injazat Technology Fund v. Najafi (N.D. Cal. 2012). Injazat and Hamid Najafi, an American, were both parties to an investment agreement with Broadlink Research FZ, LLC, a Dubai company. Najafi was Broadlink’s CEO. Under the agreement, Injazat agreed to buy 35% of Broadlink’s stock for $3 million. The agreement had an arbitration clause requiring arbitration of disputes arising under the agreement in London, under English law and the ICC rules.

Injazat alleged that Najafi had made misrepresentations about Broadlink’s liabilities in the course of the negotiations leading up to the deal, and it initiated an arbitration. Following the hearing, the arbitrator awarded Injazat damages in the full amount of its investment, plus interest, costs, and fees.

Injazat sought recognition and enforcement of the award. According to the judge, Najafi, who owned real property in the district, conceded that none of the grounds for non-recognition under the New York Convention existed. But Najafi, who initiated a second arbitration in London against Injazat on the same day that he opposed recognition of the award, sought a stay, arguing that the risk of inconsistent outcomes and the possibility of a set-off justified it. Najafi pointed to two special circumstances: Injazat was winding up its business and Najafi feared it would have no way to collect an eventual award in the second arbitration; and Najafi was unable to bring the claims in a more timely way because the government of Dubai had issued a travel ban—at Injazat’s instance—that forbade him from leaving the country. But these arguments were not enough, in the judge’s view, to suggest that he should use his discretion to stay the proceedings.

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Case of the Day: Shehadeh v. Alexander

By on April 13, 2012 in Recognition and Enforcement

The case of the day is Shehadeh v. Alexander (Ga. Ct. App. 2012). Abdel Karim Shehadeh, Mark Alexander, and others were parties to an operating agreement for Hydrajet Technology, LLC, a Georgia limited liability company. Shahadeh and Alexander entered into a separate agreement under which Shehadeh was to purchase Alexander’s interest in Hydrajet. Litigation over this second agreement resulted in a judgment of the Dubai Court of Appeals in favor of Alexander and against Shehadeh in the amount of $500,000. The Dubai judgment was later affirmed by the Dubai Court of Cassation.

Alexander sought recognition and enforcement of the judgment in Georgia. Shehadeh opposed recognition and enforcement on the grounds that the courts of Dubai did not recognize or enforce United States judgments. The trial court granted recognition and enforcement, but on appeal the court reversed.

Georgia has enacted the Uniform Foreign Money Judgments Recognition Act, but it adds one mandatory ground for non-recognition not found in the uniform statute. Under Georgia’s enactment of the statute, the judgment cannot be recognized if

The party seeking to enforce the judgment fails to demonstrate that judgments of courts of the United States and of states thereof of the same type and based on substantially similar jurisdictional grounds are recognized and enforced in the courts of the foreign state.

The court of appeals noted that Alexander had not given any evidence showing that the Dubai courts recognize US judgments. Evidence of impartiality, noted the court, was not enough: Alexander had to make an “affirmative evidentiary showing[] that the judgment is a product of a legal system that both recognizes and enforces the judgments of the federal and state courts of the United States.”

The statute says what it says, although I think courts should, if they can, read such statutes to require only evidence that the foreign court would recognize and enforce a US judgment in an appropriate case, not that the foreign court has recognized and enforced US judgments. Otherwise, the first judgment from a particular foreign court brought to the United States will necessarily fail to obtain recognition and enforcement, and that hardly sets the two states involved off on a road of comity and mutual respect! The statute itself is also subject to criticism and in my view should be amended or repealed. At most, it seems to me that reciprocity should be a discretionary ground for non-recognition. Prior to enactment of the UFMJRA, courts relied on the doctrine of comity, which was highly discretionary and which was flexible enough to avoid unfortunate outcomes like the outcome here, which, if I can make assumptions from the names of the party, harms only the US citizen who litigated a case abroad rather than trying to force his foreign opponent to litigate the merits in the United States.

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