Case of the Day: Cerner Middle East v. Al-Dhaheri
Posted on March 24, 2017
The case of the day is Cerner Middle East Ltd. v. Al-Dhaheri (D. Mass. 2017). Cerner was a Cayman Islands company with its offices in Missouri. Ahmed Dhaheri was a UAE citizen living in Abu Dhabi. He was one of the two members of iCapital LLC, a UAE company.
In 2008, iCapital made a contract with Cerner for development of a medical IT platform in the UAE. Cerner claimed that iCapital defaulted on its payment obligations. They entered into a settlement and payment agreement that contained an agreement to arbitrate under the ICC rules. iCapital defaulted again, and Cerner demanded arbitration against iCapital and Dhaheri (who was not personally a party to the agreement). The arbitration was held in Paris in 2014. The tribunal issued an award for more than $62 million in damages. It found the agreement was valid and that Dhaheri was acting as iCapital’s alter ego and was therefore bound by the agreement to arbitrate.
In 2016, Cerner sued in Middlesex Superior Court, and the defendants removed the case to the District Court in Boston. The claims were for recognition and enforcement of the award, for fraudulent transfer, and a reach-and-apply claim against Dhaheri. The fraudulent transfer and reach-and-apply claims arose out of Dhaheri’s transfer of a condominium unit in Cambridge to himself and his son and co-defendant, Abdullah, and the later sale of the condominium to a third party. The claims for recognition and enforcement was against Ahmed Dhaheri alone; the reach-and-apply claim was against Abdullah Dhaheri alone. The fraudulent transfer claim was against both.
The judge went through a classic long-arm statute and Due Process analysis and found that the court had personal jurisdiction over Dhaheri on the fraudulent transfer claim. In sum, the sale of a Massachusetts property, which underlay the claim, constituted the transaction of business in Massachusetts, and the due process factors favored the exercise of jurisdiction.
The big question was whether the court had personal jurisdiction over Dhaheri with respect to the claim for recognition and enforcement. You might think, as I do, that it’s very odd to do an ordinary personal jurisdictional analysis in a case for recognition and enforcement when it seems the defendant, though not domiciled in the forum, has assets there. If it’s necessary to show specific personal jurisdiction in such a case, what is to keep the defendant from shielding assets from execution by putting them in a jurisdiction that had no connection with the underlying claim? But many courts, including this one, hold that personal jurisdiction works the same way in recognition and enforcement cases as in any other.
In this case, since the underlying claim had nothing to do with Massachusetts and since the defendants were not subject to general personal jurisdiction in Massachusetts, the only basis for personal jurisdiction over the recognition and enforcement claim was pendent personal jurisdiction—the idea is that if the court has jurisdiction with respect to state law claims, the federal claims can “tag along.” But the court found the issue had not been sufficiently briefed and reserved decision on it until the defendants, who were in the UAE, were properly served with process.