BSG Res. (Guinea) Ltd. v. George Soros, Open Soc'y Foundations, Open Soc'y Inst., Found. to Promote Open Soc'y, Open Soc'y Found., Inc.
| Decision Date | 29 November 2017 |
| Docket Number | No. 17 Civ. 2726 (JFK),17 Civ. 2726 (JFK) |
| Parties | BSG RESOURCES (GUINEA) LIMITED, BSG RESOURCES (GUINEA) SÀRL, and BSG RESOURCES LIMITED, Plaintiffs, v. GEORGE SOROS, OPEN SOCIETY FOUNDATIONS, OPEN SOCIETY INSTITUTE, FOUNDATION TO PROMOTE OPEN SOCIETY, OPEN SOCIETY FOUNDATION, INC., ALLIANCE FOR OPEN SOCIETY INTERNATIONAL, INC., OPEN SOCIETY POLICY CENTER, and OPEN SOCIETY FUND, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Joseph Thompson Baio
Benjamin Patrick McCallen
Elizabeth J. Bower
WILLKIE FARR & GALLAGHER LLP
Before the Court is Defendants' motion to dismiss Plaintiffs' amended complaint, or, in the alternative, to stay this action pending the outcome of an arbitration proceeding between Plaintiffs and the African nation of Guinea. For the reasons stated below, Defendants' motion to stay this action pending the outcome of the arbitration is granted.
The following facts and allegations are taken from the amended complaint. Plaintiffs BSG Resources (Guinea) Limited, BSG Resources (Guinea) Sárl, and BSG Resources Limited (collectively "Plaintiffs" or "BSGR") together form an international, diversified mining group. (Am. Compl. ¶ 18.) Defendant George Soros ("Soros") is a financier who resides in the State of New York. (Id. ¶ 8.) Defendant Open Society Foundations ("OSF") is a "de facto corporation" with its principal place of business in New York City. (Id. ¶ 9.) Soros is the founder and chairman of OSF. (Id.) Defendant Open Society Institute is a charitable trust organized under the laws of the State of New York. (Id. ¶ 10.) Defendants Foundation to Promote Open Society, Open Society Foundation, Inc.,1 Alliance for Open Society International, Inc., Open Society Policy Center, and Open Society Fund, Inc. are all not-for-profit corporations with principal places of business at 224 W. 57th Street in New York City. (Id. ¶¶ 9-14.)
This case involves a dispute over mining rights in the Simandou region of Guinea. In 2005, BSGR, through itssubsidiary BSGR Guinea BVI, submitted an application for prospecting permits over available areas in the north and south regions of Simandou that would grant BSGR the exclusive right to conduct exploratory work in an effort to locate and unearth iron ore deposits. (Id. ¶ 20.) On February 6, 2006, the Guinean Minister of Mines granted BSGR's application. (Id. ¶ 22.)
On November 16, 2009, after drilling for over three years and investing over $160 million, BSGR submitted a feasibility study regarding the viability of mining operations in the southern portion of Simandou ("Simandou South"). (Id. ¶ 29.) The Guinean Agency for the Promotion and Development of Mining ("CPDM") then recommended to the Ministry of Mines that BSGR be invited to negotiate a mining and infrastructure agreement. (Id. ¶¶ 21, 29.) On December 16, 2009, BSGR and Guinea entered into the Basic Convention Agreement (the "Convention"), in which BSGR agreed to invest billions of dollars in capital investments in Guinea in exchange for the exclusive right to commercially mine iron ore in Simandou South, and a potential future grant of mining rights in other Simandou regions. (Id. ¶¶ 30-34.) On March 19, 2010, Guinea's then-president Sékouba Konaté ratified the Convention and granted BSGR a mining concession for a deposit in Simandou South. (Id. ¶ 36.) In April 2010, BSGR entered into a joint venture with another mining company, Vale,related to the development and operation of BSGR's mining rights in Simandou. (Id. ¶ 37.)
Presidential elections took place in Guinea in 2010. (Id. ¶ 44.) Soros became involved in the 2010 election to support Alpha Condé, who became President of Guinea. (Id. ¶¶ 54, 67.) In January 2011, Condé requested Soros' assistance to reform Guinea's mining industry. (Id. ¶ 67.) Condé and Soros held a joint press conference at which they announced that all existing mining contracts in Guinea would be "re-examined" and a new mining code would be enacted. (Id. ¶ 74.) On March 3, 2011, Soros publicly stated that Condé would be "introducing a new mining code . . . and all the mining claims are going to be re-examined and those who want to validate those claims will have to subscribe to the principles of [the Extractive Industries Transparency Initiative]." (Id. ¶ 78.)
Through this review process, Defendants "importuned" President Condé into forcing BSGR to improperly pay significantly more money than was agreed to under the Convention, or lose its contracts altogether. (Id. ¶ 56.) Plaintiffs allege that Defendants first masterminded an attempted extortion of BSGR. (Id. ¶¶ 57-61.) In early 2011, Condé, while "pursuing defendants' unlawful scheme," demanded that BSGR pay $1.25 billion to maintain its contractual mining rights. (Id. ¶ 58.) After BSGR refused this demand, Defendants"engaged in secret negotiations with Vale seeking payment of $500 million" which was characterized as a prepayment of taxes. (Id. ¶¶ 59, 61.) BSGR also rejected these terms. (Id. ¶ 66.)
Defendants then employed other means to "destroy BSGR's mining rights." (Id. ¶ 66.) On or about March 26, 2012, the government of Guinea established a National Mining Commission ("NMC") which was "granted the power to examine the 'extension, renewal, lease and cancellation applications for mining titles on the basis of the [2011] Mining Code.'" (Id. ¶ 98.) NMC's responsibilities were divided among two subcommittees: a Strategic Committee and a Technical Committee. (Id.) Plaintiffs allege that the Technical Committee, which was designed to serve as the operational arm of the NMC, was "entirely lacking in the resources to handle this role," and the work was eventually outsourced to other entities that were "funded by" or "controlled by" Soros. (Id. ¶ 99.)
On November 17, 2011, BSGR received a letter from the Minister of Mines and Geology which claimed that there were issues with BSGR's mining permits, set forth a lengthy list of information requests, and questioned why Vale was supposedly working in Simandou without authorization. (Id. ¶ 103.) Despite BSGR's "detailed response" and presentation of "exculpatory material," on October 30, 2012, the Technical Committee, relying on the conclusions of "Soros[-]fundedagents," sent a letter to BSGR (the "Allegations Letter") accusing BSGR of obtaining mining rights through bribery and corruption. (Id. ¶¶ 114-15, 128, 150.) To "cause BSGR further damages," Defendants leaked the contents of the Allegations Letter to the press prior to its being sent to BSGR. (Id. ¶ 130.) In 2012 and 2013, Defendants and their agents—including Global Witness, an organization that Soros "heavily funded"—continued spreading "untrue accusations" suggesting that BSGR obtained its mining rights in Guinea through bribery. (Id. ¶¶ 140-49.) In addition, Soros paid Guinean officials to influence proceedings in Guinea and cause the revocation of BSGR's mining rights. (Id. ¶¶ 161-64.)
Plaintiffs allege that Defendants were ultimately successful in their campaign to have Plaintiffs' mining rights revoked. (Id. ¶ 160.) On March 21, 2014, the Technical Committee recommended that the Minister of Mines revoke BSGR's mining rights and cancel the Convention. (Id. ¶ 151.) On April 2, 2014, the Strategic Committee issued an opinion to President Condé and the Minister of Mines agreeing with the Technical Committee's report and recommendation. (Id. ¶ 155.) Later in April of 2014, pursuant to the Technical and Strategic Committees' recommendations, President Condé and the Minister of Mines terminated the Convention and BSGR's mining rights. (Id. ¶¶ 156-58.) To date, Guinea has not compensated BSGR for its$800 million investment in Guinea. (Id. ¶ 166.) BSGR has since challenged Guinea's conduct before the International Centre for Settlement of Investment Disputes ("ICSID") in an arbitration proceeding currently pending in Paris (the "Arbitration"). (Id.) Plaintiffs seek in the Arbitration an award declaring that Guinea's termination of the Convention was unlawful and restoration of their mining rights. (See "Claimant's Memorial," Fitzmaurice Decl. Ex. 2 ¶ 431, ECF No. 57-3 (filed July 28, 2017).) Defendants are not a party to the Arbitration.
On April 14, 2017, Plaintiffs filed their initial complaint in this action against Soros and OSF only. (See Complaint, ECF No. 1 (filed Apr. 14, 2017).) On June 30, 2017, Plaintiffs filed an amended complaint, adding the remainder of the OSF entities as Defendants. The amended complaint alleges five causes of action: (1) tortious interference with contract, (2) conspiracy to commit tortious interference with contract, (3) fraud, misrepresentation, and conspiracy to commit fraud and misrepresentation (against Soros only), (4) commercial defamation, and (5) prima facie tort (against Soros only).
On July 28, 2017, Defendants moved to dismiss the amended complaint, or in the alternative to stay this action pending the outcome of the Arbitration between BSGR and Guinea. (See Mot. to Dismiss, ECF No. 55 (filed July 28, 2017).)
A. Stay Pending Arbitration
Defendants argue that, in lieu of dismissal, the Court should stay this action pending resolution of the Arbitration, which will dispose of or significantly narrow the issues at stake. (Defs.' Mem. of L. in Supp. of Mot. to Dismiss at 27.)
Within the "Court's inherent power to manage its docket" is the discretion to stay "nonarbitrable claims" in favor of a "pending arbitration," even where the parties in the litigation and the arbitration are not identical. Alghanim v. Alghanim, 828 F. Supp. 2d 636, 664-65 (S.D.N.Y. 2011). The movant seeking a stay must show "there are issues common to the arbitration and the court proceeding," and that "those issues will be finally determined by arbitration." American Shipping Line, Inc. v. Massan Shipping Indus.,...
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