Case of the Day: Injazat Technology Fund v. Najafi
Posted on May 8, 2012
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.