SDNY Orders Citibank to Instruct Gabon Subsidiary to Freeze Assets

On September 15, 2023, the Southern District of New York issued an order requiring Citibank, N.A. and Citigroup, Inc. to "unequivocally instruct the managers of Citibank Gabon, S.A. to comply with [a] present order of the Libreville Commercial Court in Gabon, and to preserve the status quo by maintaining the present freeze of the [the Cameroon Oil Transportation Company S.A. ("COTCO") funds until resolution of the COTCO shareholders' disputes, except for amounts necessary for the ordinary course of payment of COTCO's employees, taxes, and its existing subcontractors and suppliers essential to COTCO's operation of the pipeline."

This order was the result of a petition for injunctive relief in aid of arbitration filed by Savannah Midstream Investment Limited ("SMIL") pursuant to Rules 64 and 65 of the Federal Rules of Civil Procedure and Rule 7502(c) of the New York Civil Practice Law and Rules.

SMIL is a significant shareholder of COTCO, who holds over $150,000,000 in assets in Citibank's Gabon "branch." COTCO was established in the late 1990s as a result of a collaboration between the Republic of Cameroon and the Republic of Chad to develop the production capacity of certain oil fields in Southern Chad. After SMIL's ownership changed, Chad purportedly tried to nationalize SMIL's assets in COTCO and tried to oust SMIL from COTCO. According to SMIL, Chad continues to take illegal steps amid a military coup in Gabon to cause a Gabonese court to vacate a protective injunction freezing COTCO’s funds held in accounts at the Gabon branch of Citibank. SMIL initiated arbitration with the ICC International Court of Arbitration, who ordered interim relief against Chad.

Citibank opposed SMIL's request, arguing that the Court cannot direct them to freeze accounts held at Citi Gabon, which it is not a branch, but an entity independent of Citibank, that SMIL failed to name necessary parties such as COTCO and Chad and that, as a matter of comity, the Court should not intervene in the Gabon proceeding. Citibank filed a notice of appeal with the Second Circuit.

The case is Savannah Midstream Investment Limited v. Citibank, N.A. et al., No. 1:23-07771 (S.D.N.Y.). SMIL is represented by Debra Dubritz O'Gorman, Kevin S. Reed, Dennis Hranitzky, and Yehuda Goor of Quinn Emanuel Urquhart & Sullivan, LLP. Citibank and Citigroup are represented by Sharon L. Schneier, Gaurav K. Talwar, and Theodore R. Snyder of Davis Wright Tremaine LLP.

The order can be downloaded below.

Savannah Midstream.pdf

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Execution Sought Against Guinea in Delaware

After the District Court of Columbia entered default judgment against Guinea, A.D. Trade Belgium S.P.R.L. ("AD Trade") is now seeking to enforce that judgment in Delaware. On Friday, August 25, 2023, AD Trade filed a motion seeking a fi fa writ against garnishee Delaware corporation Compagnie des Bauxites de Guinee (“CBG” or “Garnishee”) in aid of enforcing A.D. Trade’s judgment against the Republic of Guinea (“Guinea”). Garnishee is owned by the state of Guinea (49%), and Harvey Aluminium of Delaware (51%).

AD Trade is seeking attachment of Guinea's stock in CBG. AD Trade is arguing that those shares are not exempt from attachment under the Foreign Sovereign Immunity Act because they are property used for commercial activity. AD Trade further explains that "[t]he CBG Shares are legally located in this District because, as a matter of Delaware law, 'the situs of the ownership of capital stock of all corporations existing under the laws of this State . . . shall be regarded as in this State,'” pointing out to 8 Del. C. § 169 and Alberta Sec. Comm’n v. Ryckman, 2015 WL 2265473, at *10 (Del. Super. Ct. May 5, 2015) (“For attachment and garnishment purposes, the situs of ownership in a Delaware corporation is Delaware.”), aff’d, 127 A.3d 399 (Del. 2015), for support. According to AD Trade, the shares are in CBG's possession.

AD Trade explains that the Court has already granted this relief in a different proceeding against Guinea, but that the sovereign reached a confidential settlement and so the shares were never auctioned off. See Compagnie Sahelienne D’Enterprise v. Republic of Guinea, C.A. No. 21-mc-530 (D. Del. Feb. 2, 2022).

Earlier this year, the District Court for the District of Delaware authorized the auction of Venezuela's shares in CITGO. We expect Delaware to become an important forum for sovereign litigation and judgment enforcement as a result of that ruling.

The case is A.D. Trade Belgium S.P.R.L. v. Republic of Guinea, 1:23-mc-00358-UNA (D.Del. 2023). AD Trade is represented by Jacob Kirkham, Josef M. Klazen, Darryl G. Stein, Geoffrey J. Derrick from Kobre & Kim.

AD Trade v. Guinea.pdf

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Stati Brothers Ask SDNY to Vacate Ex Parte Order and Quash Subpoena

The Moldovan Stati brothers, along with related entities (the "Intervenors"), intervened in a Section 1782 matter initiated by Kazakhstan to ask the Southern District of New York on April 6 to vacate an ex parte order and quash a subpoena seeking financial discovery of financial transactions from The Clearing House Payments Company L.L.C related to the Intervenors “during the last seven years” to use in ongoing foreign proceedings.

The Intervenors argued that the discovery sought by Kazakhstan was "not in aid of a foreign proceeding, as required under 28 U.S.C. § 1782[, but r]ather, ... an improper fishing expedition filed in advance of yet another round of contemplated litigation in the U.S." The Intervenors explain that although Kazakhstan claims to seek discovery in order to supports its allegations of fraud in relation to the Intervenors obtaining an arbitration award back in 2013, the financial information sought "goes back, at most, seven years, to 2016." The Intervenors further pointed out that Kazakhstan has recently filed a new action in the District of Columbia arguing that the Intervenors have obtained the 2013 award through fraud, thus proving that "the Petition in this case was in furtherance of a U.S. proceeding."

The Intervenors also ask the Court to reject Kazakhstan's claim that the information is needed “to locate the Statis’ assets to execute on cost orders” because "clear, binding caselaw from the Second Circuit Court of Appeals prohibit[s] § 1782 relief for exactly this kind of request." The Intervenors referred to Euromepa, S.A. v. R. Esmerian, Inc., 154 F.3d 24 (2d Cir.1998) and Jiangsu Steamship Co. v. Success Superior Ltd., No. 14 CIV. 9997 CM, 2015 WL 3439220, at *4 (S.D.N.Y. Feb. 5, 2015) to support their position that “[n]either pre-judgment attachment nor post-judgment proceedings are adjudicative in nature” and thus Section 1782 cannot be used to propound discovery in such cases.

The case is In re Application of the Republic of Kazakhstan for Order Directing Discovery from The Clearing House Payments Company L.L.C. Pursuant to 28 U.S.C. § 1782, No. 1:22-mc-00367-JPO. The Intervenors are represented by Berenice Le Diascorn and Thomas Vandenabeele of Kellner Herlihy Getty & Friedman, LLP.

The Motion to Vacate can be downloaded below.

Kazakhstan - Stati Mot to Vacate.pdf

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