Universal Trading & Investment Co. v. Bureau for Representing Ukrainian Interests in International & Foreign Courts
898 F. Supp. 2d 301
D. Mass.2012Background
- UTICo, a Massachusetts asset-recovery firm, and Foundation Honesty International, Inc. (Foundation) are plaintiffs; Foundation would receive a substantial portion of UTICo’s fees.
- Defendants include Ukraine’s Prosecutor General’s Office (UPGO) and the Bureau for Representing Ukrainian Interests in International and Foreign Courts (Bureau), both instrumentalities of Ukraine.
- In 1998, Ukraine contracted UTICo to recover expropriated assets of United Energy Systems of Ukraine and related parties, with a 12% commission on assets returned to Ukraine.
- UPGO issued letters and Powers of Attorney to UTICo, enabling it to pursue asset-recovery in multiple jurisdictions; UTICo allegedly assisted in freezing and recovering assets valued in the hundreds of millions.
- UTICo pursued ancillary litigation in the United States (California) seeking to attach real estate acquired with expropriated funds; Ukrainian authorities later assigned claims to UTICo, which UPGO later challenged as invalid.
- In 2007–2010, U.S. courts (California and Ninth Circuit) found the assignment invalid under Ukrainian law; UTICo thereafter filed the instant federal action in 2010 alleging multiple contract, fiduciary, misrepresentation, and related claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FSIA governs jurisdiction in this case | UTICo argues FSIA provides jurisdiction as an exception-based suit against a foreign state. | Defendants contend FSIA bars jurisdiction absent applicable exceptions. | FSIA governs; commercial activity exception applies. |
| Waiver of sovereign immunity | UTICo asserts implied/express waiver via 1998 Agreement, Powers of Attorney, and Assignment. | Defendants contend no express or unequivocal waiver exists. | No waiver found; immunity preserved. |
| Expropriation exception applicability | Assignment tainted as expropriation of Ukrainian assets; seeks immunity carve-out. | No taking of rights in property occurred; chose in action cannot count as property under expropriation. | Expropriation exception inapplicable. |
| Immovable property exception applicability | Claims relate to real estate and liens arising from asset recovery. | No rights in immovable property within U.S. are at issue in this suit. | Immovable property exception not satisfied. |
| Commercial activity exception applicability | Ukraine contracted UTICo for asset-recovery services, arguing governmental activity was commercial in nature when engaging private contract. | Activity is governmental in nature; private contract should not be treated as commercial. | Commercial activity exception applies; action not immune. |
Key Cases Cited
- Saudi Arabia v. Nelson, 507 U.S. 349 (U.S. 1993) (FSIA as sole basis for jurisdiction; exceptions matter)
- Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480 (U.S. 1983) (SB: establishes burden-shifting framework)
- World Wide Minerals, Ltd. v. Republic of Kazakhstan, 296 F.3d 1154 (D.C. Cir. 2002) (implied waivers narrowly construed)
- Republic of Argentina v. Weltover, Inc., 504 U.S. 607 (U.S. 1992) (commercial activity vs sovereign purpose guidance)
- In re Estate of Ferdinand Marcos Human Rights Litigation, 94 F.3d 539 (9th Cir. 1996) (government police power not commercial activity)
- Honduras Aircraft Registry, Ltd. v. Government of Honduras, 129 F.3d 543 (11th Cir. 1997) (private contract to assist sovereignty program deemed commercial)
- Guevara v. Republic of Peru, 468 F.3d 1289 (11th Cir. 2006) (reward for information is commercial activity)