Case of the Day: Sonera Holding BV v. Çukurova Holding AŞ

The case of the day is Sonera Holding BV v. Çukurova Holding AŞ (2d Cir. 2014). This is the appeal from the judgment confirming a Swiss arbitral award in a case I considered in January 2013. From the earlier post: “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.” The point on appeal was whether the district court had erred in holding that Çukurova was subject to the court’s personal jurisdiction. The Second Circuit held that personal jursidiction was improper and reversed.

Çukurova was a Turkish holding company with registered offices in Istanbul. It has no operations or property in the United States. The case for general jurisdiction rested on the contacts of some of Çukurova’s affiliates with New York. These included negotiations (outside the United States) to sell an interest in a US firm to two New York private equity funds; sale of depository shares in Turkcell to a London underwriter, who then offered them for sale on the NYSE; an affiliate’s agreement to provide TV content to a US company; New York offices run by two Turkish affiliates; and a statement on an affiliate’s website describing itself as Çukurova’s “gateway to the Americas.”

Under Daimler AG v. Bauman, 134 S.Ct. 746 (2014), decided after the district court’s decision, these sorts of contacts are no longer sufficient to make out a case for general jursidiction. The new Daimler test is whether the corporation’s contacts with the forum are “so continuous and systematic as to render [it] essentially at home in the forum State. … a corporation that operates in many places can scarcely be deemed at home in all of them.” A corporation is at home, the Second Circuit says, at the place of incorporation and the principal place of business. But even if all of the affiliates’ contacts with New York were to be attributed to Çukurova, it was clear that they didn’t allow the conclusion that Çukurova was at home in New York.

Sonera’s backup argument failed, too. It pointed to the arbitration agreement between the parties, which provided:

Any award of the arbitral tribunal may be enforced by judgment or otherwise in any court having jurisdiction over the award or over the person or the assets of the owing Party or Parties. Applications may be made to such court for judicial recognition of the award and/or an order for enforcement, as the case may be.

The court did not agree, regarding this as merely “a standard entry-of-judgment clause designed to clarify that, following any arbitration award, a court of the arbitral venue or in any jurisdiction in which the parties’ persons or assets are located would have jurisdiction to enter judgment on that award.”

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