Sea Launch Litigation to Remain in California Court
After a summer and fall involving two large trials, an arbitration and a half-Ironman I was anxious to revisit some of the cases I wrote about earlier this year. The case I was most interested in updating was Boeing’s suit, against its Russian and Ukranian partners, in connection with their failed Sea Launch project.
Sea Launch utilizes a mobile sea platform that can be maneuvered along the Pacific Ocean equator. The goal is to position the platform at the optimum geographic launch point for the particular spacecraft’s flight plan, orbit, etc.
Following Sea Launch’s bankruptcy, disputes arose among the parties, including this suit and a Swedish arbitration.Boeing’s suit was filed against a Ukrainian based aerospace design company, as well as Energia, an aerospace manufacturer allegedly owned and controlled by the Russian Federation. Boeing’s complaint alleges that, following the “failure” of the project, the defendants failed to honor their contractual agreement to reimburse Boeing for its $450 million investment in the venture. The complaint suggests that the defendants were not disputing the debt, but were instead attempting to “stall and evade, forcing Plaintiffs to chase them around the world to secure payment of debts clearly owed”.
The defendants filed motions to dismiss the case on various grounds. In June the federal court denied the motions, finding:
1. That it had jurisdiction over the case through the Foreign Sovereign Immunities Act, as at least one of the two defendants was a “state-owned entity” of its country.
2. That the case should not be dismissed due to the forum non conveniens doctrine, because federal court in Los Angeles was a sufficiently “convenient” venue for the case to be tried. The court basically determined that, since Sea Launch was based in California, the parties could litigate in California, rather than the United Kingdom, where the defendants wanted to move the case.
3. That the case should not be delayed (stayed) due to the related arbitration of the matter in Sweden.
The defendants also filed counterclaims against Boeing, based on the company’s alleged “fraud and deceit” in connection with the project. They claim Boeing was granted rights to Sea Launch’s proprietary technology at Energia’s expense and excessively billed for projects. The court has dismissed certain portions of the counterclaim. In ruling on the motion the court had to determine the effect on the suit of an award the Swedish arbitration panel entered against Boeing. The parties submitted competing opinions on the effect of the award. Ultimately, the court found that the award was binding and enforceable in the federal court and that Energia could attempt to enforce it there.
This is an enormously complicated case involving complex legal theories and multiple powerful parties. And the case appears to have a long way to go.