Case of the Day: Sonera Holding BV v. Çukurova Holding AŞ
Posted on January 7, 2013
The case of the day is Sonera Holding BV v. Çukurova Holding AŞ (S.D.N.Y. 2012). The decision does not set out the facts of the underlying case, but an earlier decision by the Court confirming the underlying arbitral award explains that the dispute arose out of a share purchase agreement requiring Çukurova to deliver to Sonera shares in Turkcell Holding AŞ, which owned Turkcell İletişim Hizmetleri AŞ, Turkey’s largest mobile phone service. Sonera claimed a breach by Çukurova, and an arbitral tribunal in Switzerland awarded Sonera $932 million in damages. Çukurova appealed, but because it did not file a supersedas bond, 1 Sonera served a notice restraining Çukurova from transferring assets. The restraining notice is a procedure permitted under New York law, and incorporated into federal law by FRCP 69(a)(1).
Çukurova argued that the restraining notice was ineffective because it had to be served pursuant to the Hague Service Convention. 2 Under the relevant New York statute, NY CPLR § 5222, the restraining notice had to be served “personally in the same manner as a summons or by registered or certified mail.” Turkey is a party to the Convention, and it has objected to service by postal channels under Article 10.
Because of the quirky wording of the New York statute, this ruling seems right. Çukurova sought to characterize the restraining notice as a form of discovery in aid of execution, but that argument seems plainly wrong. Çukurova also cited Amaprop Ltd. v. Indiabulls Financial Services, the case of the day from October 25, 2012, but as I noted in my post on that case, it seems wrongly decided.
- Under FRCP 62(d), the losing party can obtain a stay of a judgment by filing a bond that the court approves, but unless the losing party obtains a stay, the judgment is enforceable by writ of execution fourteen days after entry, even if it is appealed. This is contrary to the practice in some states, such as my own state of Massachusetts, where an execution will not issue until appellate review is exhausted. ↩
- Çukurova also sought relief from the judgment on the grounds that the court had lacked personal jurisdiction. I do not review that argument here. ↩