The World in U.S. Courts: Summer 2014 - Personal Jurisdiction
Sonera Holding, a Dutch Corporation, filed suit in District Court in New York, seeking to enforce a final arbitration award against Cukurova Holding, the parent company of a Turkish conglomerate. The parties participated in arbitration in Switzerland over failed negotiations for Senora’s purchase of shares of a holding company with a controlling stake in a Turkish mobile phone operator. The arbitration tribunal found for Plaintiff Senora and ordered Cukurova to pay $932 million in damages for failing to deliver the shares. Senora filed to enforce the award in jurisdictions around the world.
The Court rejected Cukurovas’s motion to dismiss for lack of personal jurisdiction and issued four orders confirming the arbitration award. Cukurova appealed, arguing, among other things, that the Court lacked personal jurisdiction over it.
Sonera argued that personal jurisdiction existed because (1) Cukurova itself engaged in systematic and continuous contact with New York, and (2) even if Cukurova’s contacts were not sufficient, numerous subsidiaries of Cukurova did have contacts that would support jurisdiction over the parent. The Court of Appeals addressed New York law of personal jurisdiction, noting that the required “doing business” in New York “do[es] not necessarily need to be conducted by the foreign corporation itself.” However, while New York law had approved an “agency” theory by which parents would be liable for the conduct of their subsidiaries under certain circumstances, the Court of Appeals noted that this theory had been rejected as a matter of U.S. constitutional law by the U.S. Supreme Court in Daimler AG v. Bauman.
The Court of Appeals thus restricted its analysis solely to Cukurova’s direct contacts with New York. First, Sonera argued several intermittent contacts with New York provided jurisdiction, including (1) unsuccessful negotiations to sell an entity to New York-based private equity funds, (2) the sale of an entity to a London underwriter, who in turn offered it for sale in New York, (3) an agreement with a U.S. corporation to provide digital television content, (4) an office in New York used by two subsidiaries, and (5) statements on a subsidiary’s website promoting it as “Cukurova’s connection to the United States.” The Court rejected these arguments because, even if all contacts were imputed to Cukurova, its principal place of business remained in Turkey, which prevents finding general personal jurisdiction. The Court also rejected specific personal jurisdiction, rejecting Sonera’s argument that Cukurova had consented to jurisdiction because the agreement to arbitrate contained a provision allowing enforcement of any award. The Court found this provision did not amount to a waiver of personal jurisdiction in the United States.