By Natalie Olivo
Law360, New York (August 14, 2017, 1:59 PM EDT) — A security contractor asked a Virginia federal judge Friday to let it issue subpoenas to two executives tied to a United Arab Emirates-based food supplier for the U.S. Department of Defense, arguing their depositions could show the court has jurisdiction to enforce a $31 million arbitral award.
The security contractor — CTR Ltd., or Compass — is also based in the UAE and is trying to confirm an arbitration award issued against food supplier Supreme Risk Management FZE in a dispute stemming from protection contracts for caravans of food, water and fuel delivered to troops in Afghanistan. In fighting Compass’ enforcement efforts, SRM has argued that the court lacks jurisdiction because SRM has never done business in the U.S.
According to Compass, however, SRM has a link to Virginia based on its parent and Dutch holding company, Supreme Group BV. The security contractor on Friday claimed that the owners of Supreme Group and de facto officers of SRM, Stephen Orenstein and Michael Gans, “can provide information that would establish personal jurisdiction allowing the enforcement of a debt.”
Yet SRM has taken the position that it does not control these two executives and will not produce them for depositions, Compass said. In asking the court to let it issue subpoenas to Orenstein and Gans, the security contractor noted that they are both U.S. citizens or residents and are currently living in Germany and Switzerland, respectively.
“As owners and managers of the Supreme Group, these two individuals are uniquely positioned to testify both as to the corporate governance and administration of Supreme Group entities and as to the operations and connections of the Supreme Group with respect to the U.S.,” Compass said.
SRM is trying to duck a confirmation bid Compass launched in October to satisfy a Dubai International Arbitration Center decision handed down the previous summer. That decision stemmed from protection contracts for supplies delivered to troops in Afghanistan by companies controlled by SRM. The arbitration had been initiated by SRM, according to Compass’ confirmation petition, after the food company canceled the protection contracts on the grounds that Compass failed to provide sufficient personnel to protect the convoys.
Compass said at the time that the arbitrator rejected those claims and instead sided with it on counterclaims brought against SRM, awarding the security contractor $31,204,000, plus costs and interest. Yet SRM has failed to pay up, according to the petition.
In challenging jurisdiction, SRM contended in April that all Compass has are “unsupported allegations and bald legal conclusions” labeling SRM and Supreme Group “alter egos” and contending SRM merely functions as a “shell” of its parent, which are not enough for pleading standards and don’t grant U.S. jurisdiction under the New York Convention.
While the convention typically allows for arbitration confirmation across national borders in signatory countries, SRM argued it only confers jurisdiction when it would exist otherwise, and there is no such jurisdiction here.
In a separate request filed on Friday, Compass asked the court to let it issue letters of request for international jurisdiction assistance from other countries, citing SRM’s purported refusal to provide certain requested documents and witnesses.
The contractor pointed to the Hague Convention, under which judicial authorities in one signatory country can obtain evidence located in another country to use in judicial proceedings.
In this case, Compass is seeking in part jurisdictional discovery from Supreme Group, which “would be expected to have a full corporate organizational chart, information about the disposition of SRM’s shuttered bank accounts and emails exchanged between its directors and SRM.”
Compass also said it is seeking information from Swiss company Supreme Foodservice GmbH, which it said is also under the Supreme Group umbrella, to shed light on how the parent company operates its subsidiaries.
Counsel for the parties did not respond to requests for comment Monday.
Compass is represented by Noah Mink, Cailyn M. Reilly, Sterling A. Marchand and Ryan E. Bull of Baker Botts LLP.
SRM is represented by Stacey Rufe and Raquel O. Alvarenga of Clyde & Co US LLP.
The case is CRM Ltd. v. Supreme Risk Management FZE, case number 1:16-cv-01344, in the U.S. District Court for the Eastern District of Virginia.
–Additional reporting by Matthew Guarnaccia and Bryan Koenig. Editing by Alyssa Miller.