Petronas Azerbaijan - Shah Deniz Sarl - United States District Court Southern District of New York Case No 1-24-mc-00242 - Memorandum of Law in Support of Ex Parte Application for an Order to Conduct ... (2024)

Summary

Petronas Azerbaijan (Shah Deniz) and Petronas South Caucasus (collectively, "Luxcos" or "Petitioners"), respectfully submit this memorandum of law in support of their application foran order, pursuant to 28 U.S.C. § 1782, to conduct discovery for use in aid of a foreignproceeding.

INTRODUCTION

Petitioners have been harmed in connection with enforcement efforts relating to certainrogue arbitration awards wrongfully obtained against the government of Malaysia. Theunderlying arbitration, the subject matter of which implicates issues relating to a long-standingterritorial dispute between individuals who claim to be descendants of former regional sultanate(the Sultanate of Sulu), has been the subject of a considerable controversy from its inception toits shocking conclusion ("Arbitration"). The highly irregular final award in the Arbitration (the"Final Award"), which purported to redraw the Malaysian borders and subject the people ofMalaysia to a debt comprising about 16% of Malaysia's annual budget, was rendered by aprivate Spanish commercial arbitrator. That arbitrator, though initially appointed by the Spanishcourt, had his appointment annulled shortly after the arbitration proceedings were commenced(by the same court). Notwithstanding that annulment, the arbitrator continued to assert his nownon-existent authority as arbitrator and purported to move the seat of the Arbitration fromMadrid, Spain, to Paris, France, where he--wrongly and without authority to do so--issued theFinal Award which, among other things, mischaracterized the proceedings as a privatecommercial dispute.

This has had a very significant impact on Petitioners, non-parties to the Arbitration, whohave incurred, and continue to incur, significant damages in seeking to set aside attachmentswhich have been improperly levied over their bank accounts by the claimants in the Arbitration(the "Sulu Claimants"), which attachments have naturally disrupted Petitioners' operationsmore generally. The Sulu Claimants have also threatened to enforce the improperly issued finalaward against the worldwide assets of the corporate group of which Petitioners are members,Petroliam Nasional Berhad ("Petronas"), a global Malaysian energy corporation. Indeed, theSulu Claimants have already sought to enforce the Final Award against Petitioners inLuxembourg, and have publicly stated that they will file suit in the other 169 countries in theworld forthwith. See Declaration of Gonzalo S. Zeballos dated May 28, 2024 (the "ZeballosDecl.") at ¶ 19.

The most recent development in the case has been the criminal conviction of thearbitrator, Mr. Gonzalo Stampa ("Mr. Stampa" or the "Arbitrator"), in Spain for failure tofollow the orders of a Spanish court--more specifically, for continuing to preside over theArbitration even after the Spanish court's annulment of his appointment, which rendered void abinitio his authority to act as an arbitrator in these proceeding. Mr. Stampa was sentenced to six-months in prison.

Petitioners intend to pursue a civil claim against Mr. Stampa in Spain for damages arisingfrom the harm incurred, and which continues to be incurred, by Petitioners as a result of therogue Arbitration. Petitioners also intend to bring a civil claim in Spain against the SuluClaimants, their attorneys including lawyers working at the Spanish law firm, B. Cremades yAsociados "Cremades"), and the entity (or entities) finding and/or supporting the SuluClaimants in the Arbitration and the present global enforcement proceedings (the "Funder"),which Petitioners reasonably believe to be special purpose vehicles or other entities related to theTherium Group of companies (of which Evergreen Parent GP LLC ("Evergreen"), TheriumCapital Management Ltd. ("Therium"), Therium Capital Management (USA) Inc. ("TheriumCapital") are all members) (collectively, the -Therium Group")), for acting with willfulnegligence by purposefully ignoring the revocation of Mr. Stampa's authority as arbitrator by theSpanish courts prior to the issuance of the Final Award, and instead requesting Mr. Stampa tomove the seat of the Arbitration from Madrid to Paris, away from the Spanish court'sjurisdiction. Petitioners also intend to commence a private prosecution against Cremades, theSulu Claimants, and/or Therium for inducing Mr. Stampa to commit the offence of disobedience.

Finally, Petitioners intend to pursue civil claims against the Sulu Claimants and Therium inLuxembourg to recover the losses arising out of the Attachments (as defined below) broughtagainst them in Luxembourg despite the Spanish courts having nullified Mr. Stampa'sappointment as Arbitrator.

In connection with those actual and potential lawsuits, Petitioners seek discovery fromTherium Capital, a US affiliate of Therium, and Evergreen, Therium's ultimate parentcorporation, both of whom have offices in New York, as well as discovery from New York-based banks that handled dollar-denominated transactions between the Therium Group, the SuluClaimants, Mr. Stampa, and/or any other entities or persons related to or connected with theArbitration. Most critically, discovery will be sought from Therium Capital, Evergreen, and/orvarious New York-based banks relating to: (1) any money transfers between or among any of theTherium Group and Mr. Stampa, the Sulu Claimants, and/or the Sulu Claimant's Attorneys; (2)any communications between or among any of the Sulu Claimants and/or the Sulu Claimants'Attorneys; and (3) the level of control and direction that the Therium Group has over the SuluClaimants' legal strategy including the Sulu Claimants' decision to initiate and maintain theAttachments against Petitioners in Luxembourg.

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