Norex Petroleum Ltd. v. Blavatnik, 650591/11.

• Decision Date: 25 August 2015
• Docket Number: No. 650591/11.,650591/11.
• Parties: NOREX PETROLEUM LIMITED, Plaintiff, v. Leonard BLAVATNIK, Victor Vekselberg, Simon Kukes, Access Industries, Inc., Alfa Group Consortium, Renova, Inc., OAO Tyumen Oil Company, TNK–BP Limited, and BP PLC, Defendants.
• Court: New York Supreme Court

22 N.Y.S.3d 138 (Table)

NOREX PETROLEUM LIMITED, Plaintiff,

v.Leonard BLAVATNIK, Victor Vekselberg, Simon Kukes, Access Industries, Inc., Alfa Group Consortium, Renova, Inc., OAO Tyumen Oil Company, TNK–BP Limited, and BP PLC, Defendants.

No. 650591/11.

Supreme Court, New York County, New York.

Aug. 25, 2015.

Barry R. Ostrager, Mary Kay Vyskocil, and Jonathan M. Weiss of Simpson Thacher & Bartlett LLP, for Plaintiff/non-movant Norex.

Turner P. Smith and Myles K. Bartley of Curtis, Mallet–Prevost, Colt & Mosle LLP, for movant Blavatnik.

Lawrence J. Reina and Herbert F. Kozlov of Reed Smith LLP, for movant Vekselberg.

Frederic S. Newman and Joshua L. Blosveren of Hoguet Newman Regal & Kenney LLP, for movant Kukes.

Corey Worcestor and Faith Gay of Quinn Emanuel Urquhart & Sullivan LLP, for movant Access.

Henry J. Ricardo of Patterson Belknapp Webb & Tyler LLP, for movant Renova.

W. Randolph Teslik and Kim Koopersmith of Akim Gump Strauss Hauer & Feld LLP, for movant Alfa.

Owen C. Pell, Scott E. Hershman, and Brian E. Fritz of White & Case LLP, for movants TNK and TNK–BP.

Daryl A. Libow and Christopher M. Viapiano of Sullivan & Cromwell LLP, for movant BP.

EILEEN BRANSTEN, J.

In this action, Plaintiff Norex Petroleum Limited ("Norex") asserts eight causes of action, including tort and quasi-contract claims, against Defendants Leonard Blavatnik, Victor Vekselberg, Simon Kukes, Access Industries, Inc. ("Access"), Alfa Group Consortium ("Alfa"), Renova, Inc. ("Renova"), OAO Tyumen Oil Company ("TNK"), TNK–BP Limited ("TNK–BP"), and BP PLC ("BP"). These claims stem from Defendants' alleged conspiracy to strip Norex of its controlling interest in a Russian oil company named ZAO Yugraneft ("Yugraneft"), which owns a valuable oil field in Western Siberia.

Defendants filed five motions to dismiss, which are consolidated herein for disposition. In motion 013, TNK and TNK–BP seek dismissal based on a lack of personal jurisdiction. In motion 014, Blavatnik, Vekselberg, Kukes, Access, Alfa, Renova

, TNK and TNK–BP seek dismissal based on a failure to state a cause of action, forum non conveniens, collateral estoppel, and statute of limitations grounds. In motion 015, Alfa seeks dismissal for lack of personal jurisdiction and because it not an entity that can be sued. In motion 016, BP seeks dismissal based upon a failure to state a cause of action and statute of limitations grounds. Finally, in motion 017, Kukes seeks dismissal based upon a lack of personal jurisdiction.

Norex opposes all five motions. For the reasons that follow, Defendants' motions are granted and the Amended Complaint is dismissed.

I. Background

Plaintiff contends that Defendants conspired to rob Norex of its controlling interest in a Russian oil company named ZAO Yugraneft ("Yugraneft"). Yugraneft owns an oil field in Western Siberia worth hundreds of millions of dollars.

Defendants allegedly relieved Norex of its controlling interest in Yugraneft by corrupting Russian court proceedings and government officials in an attempt to decrease Norex's ownership interest in and voting rights over Yugraneft (the"Know-How Case"), forging documents, and ultimately sending armed private militiamen carrying AK–47 assault rifles to storm Yugraneft's corporate offices and oil field in June 2001.

A. The Parties

Plaintiff Norex is a corporation organized under the laws of Cyprus. Norex maintains a representative office in Calgary, Canada. Its principal and chairman is Alex Rotzang, a Canadian national.

Defendant Leonard Blavatnik is alleged to be a Russian oligarch, among the world's wealthiest individuals with a net worth estimated around $7.5 billion. Blavatnik is a citizen of the United States and maintains a residence in New York County, New York.

Defendant Victor Vekselberg is also alleged to be a Russian oligarch, among the world's wealthiest individuals with a net worth of approximately $6.4 billion. Vekselberg is a resident of the United States and maintains a residence in New York County, New York.

Defendant Simon Kukes is a United States citizen and allegedly a resident of New York. Kukes was the President and Chief Executive Officer of Defendant TNK during the relevant time period.

Defendant Access Industries, Inc. is a company organized under the laws of the State of New York with a principal place of business in New York County, New York. Access was founded by Blavatnik, and is allegedly owned and controlled by him as well.

Defendant Renova, Inc. is organized under the laws of the State of New York with a principal place of business in New York County, New York. Renova is allegedly owned and controlled by its president, Vekselberg.

Defendant Alfa Group Consortium is an unincorporated association of various affiliated companies, formed by several Russian billionaire magnates. Alfa is alleged to regularly transact business in New York, including a variety of investment activities.

Defendant OAO Tyumen Oil Company is a company organized under the laws of the Russian Federation. It is believed to have been formerly known as "TNK" and under that former name was involved in the malfeasance alleged.

Defendant TNK–BP is a company organized under the laws of the British Virgin Islands. TNK–BP is a joint venture in which Defendant BP owns 50%, Defendants Access and Renova

own 25%, and Defendant Alfa owns 25%.

BP PLC is a company organized under the laws of England. BP is an energy company which transacts business around the world, including in New York.

B. The Joint Venture

In 1991, Norex and nonparty Chernogorneft formed Yugraneft as part of a joint venture to develop an oil field in Western Siberia. Norex alleges that it contributed technology and capital totaling approximately $7 million. Chernogorneft agreed to contribute $800,000 in capital and rights to the oil field. As a result, Norex held a 60% interest in Yugraneft and Chernogorneft held a 40% interest.

According to the Amended Complaint, the venture was almost immediately profitable, paying millions of dollars of dividends by 1992. Notably, in March 1999, it was discovered that Chernogorneft failed to make some or all of its initial capital contribution, such that Norex's ownership stake increased from 60% to 97.64% of Yugraneft.

C. The Conspiracy

In the late 1990s, following the collapse of the USSR, Defendants Blavatnik and Vekselberg allegedly plotted to gain control of various oil interests throughout Russia. In 1998, Defendants Blavatnik and Vekselberg, acting through their companies Access and Renova

, and together with Defendant Alfa, allegedly forced nonparty Chernogorneft into bankruptcy, and thereafter assumed control of Chernogorneft's assets, including its interest in Yugraneft.

Norex alleges that Defendants were upset about the dilution of their interest in Yugraneft from 40% to 2.36%. Norex alleges that around this time it was discovered that Yugraneft's oil field had greater reserves than previously estimated.

D. The Russian Court Action ("Know–How Case")

On June 25, 2001, three days before a Yugraneft shareholders meeting, Defendants Access, Renova

, Blavatnik, Vekselberg, Alfa, and Kukes allegedly caused TNK to file a complaint in a Russian court against Norex. In this complaint, TNK alleged that Norex's initial contribution of "technical know-how' " had been overvalued (the "Know–How Case."). TNK sought to have Norex's contribution revalued to reduce Norex's ownership percentage in Yugraneft.

Norex alleges that it was not properly served with process or a copy of the complaint in the Know–How Case. Notwithstanding the lack of service, the Russian court allegedly issued an ex parte ruling enjoining Norex from voting the majority of its shares at the upcoming shareholders' meeting and prohibiting Yugraneft from counting these shares at any other meetings that might occur. Norex also alleges that Defendants bribed certain of the Russian court officials involved to obtain this favorable ruling.

E. The Takeover

The Yugraneft shareholder meeting took place on June 28, 2001 with two court bailiffs in attendance to enforce the Know–How court's injunction. Norex alleges that because TNK had not yet registered its ownership of Yugraneft shares, it could not vote at that meeting. Norex alleges that it voted the portion of its shares that it was permitted to vote and re-elected Lyudmilla Kondrashina as Yugraneft's Director General.

The next day, according to Norex, TNK sent armed private soldiers to take control of Yugraneft's corporate offices. Following the takeover, Defendants began to allegedly divert funds from Yugraneft. On January 24, 2002, the Russian court entered a default judgment in the Know–How case and reduced Norex's equity interest in Yugraneft to 20%.

In 2003, Norex alleges that BP formed a joint company with TNK called TNK–BP, which assumed control over Yugraneft as one of its myriad oil assets. Since its founding in 2003, TNK–BP has distributed more than $20 billion in dividends to its shareholders, none of which has been received by Norex.

F. Prior Federal Action

Norex commenced an action in the Southern District of New York on February 26, 2002, asserting various Racketeer Influenced and Corrupt Organizations Act ("RICO") claims ("Prior Federal Action"). In February 2004, the district court granted a motion to dismiss on forum non conveniens grounds. See Norex Petroleum Ltd. v. Access Indus., Inc., 304 F.Supp.2d 570 (S.D.N.Y.2004). The Second Circuit reversed, holding that forum non conveniens dismissal requires available alternative fora and that because time to appeal the Know–How judgment in Russia had elapsed, Russia was not an available forum. See Norex Petroleum Ltd. v. Access Indus., Inc., 416 F.3d 146 (2d Cir.2005).

In September 2007, the district court again dismissed the action, this time for lack of subject matter jurisdiction, holding that RICO lacked extraterritorial effect. See Norex Petroleum Ltd. v. Access Indus., Inc., 540 F.Supp.2d 438 (S.D.N.Y.2007). The Second Circuit affirmed, not because subject...