Big Win for Boeing in Sea Launch Lawsuit

Back in 2013 I first wrote about Boeing Commercial Space Company’s $355 million breach of contract suit against its overseas partners in connection with the troubled Sea Launch project.

Sea Launch utilizes a mobile sea platform, which can be maneuvered along the Pacific Ocean equator. The goal is to position the platform at the most geographically desirable launch point for the particular spacecraft’s flight plan, orbit, etc. This results in higher payload capacity and reduced costs.

According to Boeing’s suit, Sea Launch made 30 launches or attempted launches since 1999. The most recent occurred on January 31, 2013 (the day before the suit was filed).

The defendants to the suit include (1) Yuzhnoye (a Ukranian aerospace design company, wholly owned by the State of Ukraine), (2) Energia (a Russian manufacturer of spacecraft and space station components, of which the primary owner is the Russian Federation) and (3) two companies allegedly owned or controlled by Energia.

The suit, filed in federal court in Los Angeles, claims that Boeing, in 1995, agreed to enter into the joint venture with the international partners. Boeing claims that it financed the project, and that the defendants contractually agreed to repay it if the project failed.

Boeing alleges that “Sea Launch failed”, due to “weakness in the demand for commercial satellite launches, unexpected cost increases, operational losses, mounting debt, increased competition among commercial satellite launch providers, and a launch failure which led to a $53.2 million arbitration award against Sea Launch”. These events, it claims, led to a 2009 bankruptcy declaration by the venture.

The suit goes on to claim that Yuzhnoye and Ernegia failed to repay the $350 million they allegedly owe Boeing as a result of the failure.

Boeing claimed that the defendants never denied their obligation to repay the money, but instead focused their efforts on evading payment, starting arbitration proceedings and the fighting jurisdiction of the courts. Boeing claims that the defendants’ strategy is to “stall and evade, forcing Plaintiffs to chase them around the world to secure payment of debts clearly owed”.

Last September, the court handing Boeing a resounding win.  In a 50-page order, the court granted Boeing’s Motion for Summary Judgment, finding that Energia and Yuzhnoye breached their agreements with Boeing.  The court rejected every one of the defenses asserted by the foreign companies and ordered that the case proceed to a trial on the issue of what damages Boeing suffered as a result of the breaches. The trial was held in November but as of today, the court does not appear to have issued a ruling on what damages, if any, Boeing will be awarded.

Interestingly, a new report from the Russian news service states that Sea Launch might resume operations in 2016.

The Law Office of Phil Griffis

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THE LAW OFFICE OF PHIL GRIFFIS

Phil Griffis obtained his first jury verdict in 1990, when he convinced a jury that a customer’s fall at his client’s store did not cause the customer’s aspiration pneumonia and stroke. In the years since he has continued to win in courtrooms across the State of Texas.