## Facts

- Norwegian telecommunications company Telenor Mobile Communications AS (Telenor) and Ukrainian company Storm LLC (Storm) were shareholders in Kyivstar G.S.M., a Ukrainian mobile telecommunications company.
- Storm functioned as a holding company that owned 40% of Kyivstar.
- Altimo Holdings Investment Ltd. (Altimo), formerly Alpha Telecommunications, owned a majority interest in Storm through affiliated entities, including Alpren Ltd.
- Telenor and Storm entered into a 2004 shareholders’ agreement governing Kyivstar’s corporate governance and containing a dispute-resolution clause requiring arbitration in New York under the UNCITRAL Rules.
- Telenor commenced a New York-seated arbitration alleging Storm violated the shareholders’ agreement by failing to follow governance procedures and obstructing Kyivstar’s corporate functioning.
- While the arbitration was pending, Alpren (a Storm owner) filed litigation in Ukraine against Storm challenging the enforceability of the shareholders’ agreement; a Storm-related officer (Vadim Klymenko) appeared in the Ukrainian action on Storm’s behalf.
- Ukrainian courts issued rulings declaring the shareholders’ agreement invalid, and later proceedings in Ukraine sought to bar Storm, Telenor, and Klymenko from participating in the New York arbitration.
- Storm attempted to use the Ukrainian rulings to stop the arbitration, including efforts in New York courts disputing the tribunal’s ability to proceed.
- Telenor petitioned in federal court in the Southern District of New York to compel arbitration and sought an antisuit injunction to stop Storm from pursuing or supporting Ukrainian litigation intended to interfere with the New York arbitration.

## Issues

1. Whether the court should compel Storm to proceed with arbitration in New York under the parties’ shareholders’ agreement despite Ukrainian judgments declaring the agreement (and arbitration clause) invalid and purporting to bar arbitration.
2. Whether the court should issue an antisuit injunction restraining Storm from prosecuting or supporting Ukrainian proceedings that conflicted with the agreed New York arbitration.
3. How principles of international comity affect the court’s response to foreign judgments obtained in parallel litigation aimed at defeating the arbitration agreement.

## Decision

- The court ordered Storm to proceed with arbitration in New York as required by the shareholders’ agreement.
- The court granted an antisuit injunction restricting Storm (and persons acting with it) from pursuing or supporting Ukrainian litigation to the extent it would interfere with the New York arbitration.
- The court declined to treat the Ukrainian judgments as controlling for purposes of stopping the arbitration in the contractually chosen forum.

## Legal Principles

- Under the Federal Arbitration Act and federal policy favoring arbitration, courts generally enforce written arbitration agreements according to their terms, including agreed arbitral seat and rules in an international commercial dispute.
- A party’s use of foreign litigation to obtain rulings aimed at disabling the agreed arbitral forum does not automatically defeat enforcement of the arbitration clause in a U.S. court.
- In the Second Circuit, a federal court may issue a foreign antisuit injunction against a party (not the foreign court) when foreign proceedings threaten the court’s ability to protect the dispute-resolution process chosen by contract and when equitable factors, including avoidance of oppressive or bad-faith parallel litigation, favor relief.
- International comity is considered, but it may yield when foreign proceedings are deployed to nullify the parties’ agreement to arbitrate in the selected forum and to obstruct the arbitration already underway.

## Conclusion

The Southern District of New York enforced the parties’ New York-seated UNCITRAL arbitration clause by compelling Storm to arbitrate and by enjoining Storm from pursuing or supporting Ukrainian court actions that would obstruct the arbitration, while treating the Ukrainian invalidity rulings as insufficient to halt the arbitration in the forum the parties selected by contract.


Storm LLC v. Telenor Mobile Communications, 2006 U.S. Dist. LEXIS 90978 (2006)