REPUBLIC OF KAZAKHSTAN v. CHAPMAN LLC LP GP LLC ACP LLC (2022)

The motion to dismiss (Mtn. Seq. No. 003) is granted and the motion to stay discovery (Mtn. Seq. No. 002) is denied as moot.

This action is predicated on an impermissible collateral attack of a confirmed arbitration award (NYSCEF Doc. No. 32; Prime Charter, Ltd. v. Kapchan, 287 A.D.2d 419, 419, 731 N.Y.S.2d 734 [1st Dept. 2001], citing Corey v. New York Stock Exchange, 691 F.2d 1205, 1211-12 [6th Cir. 1982]). Simply put, there can be no action for aiding and abetting fraud without an underlying fraud (Chambers v. Weinstein, 135 A.D.3d 450, 21 N.Y.S.3d 892 [1st Dept. 2016]). The lawsuit against these defendants who funded the enforcement proceedings of the arbitration award therefore fails as a matter of law.

The arbitration award was obtained by the court in Sweden and it is that court that has the charge of setting aside the arbitration award based on fraud, not this one (InterDigital Communs., Inc. v. Huawei Inv. & Holding Co., 166 F. Supp. 3d 463, 469 [2d Cir. 2016]). Arguments that the award were obtained by fraud were indeed considered and rejected by the court in Sweden and the District Court of the District of Columbia (Svea Court of Appeal Opinion § 5.3.1; Sung Hwan Co., Ltd. v. Rite Aid Corp., 7 N.Y.3d 78, 82-83, 817 N.Y.S.2d 600, 850 N.E.2d 647 [2006]; Stati v. Republic of Kaz., 302 F. Supp. 3d 187, 209 [D.D.C. 2018]). The findings of the DC Court are entitled to full faith and credit (Matter of Frontier Ins. Co., 27 A.D.3d 274, 275, 813 N.Y.S.2d 50 [1st Dept. 2006], citing Garvin v. Garvin, 302 N.Y. 96, 103, 96 N.E.2d 721 [1951] and Union Commerce Leasing Corp. v. Kanbar, 155 A.D.2d 396, 548 N.Y.S.2d 22 [1989]; Lewin v. Four Seasons Solar Prods. Corp., 264 A.D.2d 716, 717, 694 N.Y.S.2d 749 [2d Dept. 1999]). It is wholly irrelevant that the plaintiff was able to convince a court in Belgium to indicate that the award was obtained by fraud and refused to recognize it there (NYSCEF Doc. No. 44 [denying Exequatur (enforcement proceedings) and declaring that in Belgium the Swedish arbitration award cannot be recognized or enforced because the Statis “committed acts which must be characterized as fraudulent acts ․ which have cause an unquestionable impact on the [a]rbitral [a]ward”]).

The court has considered the plaintiff's remaining arguments and finds them unavailing.

Accordingly, it is

ORDERED that the motion to dismiss is granted; and it is further

ORDERED that the motion to stay discovery is denied as moot.

Andrew Borrok, J.